A bullish win streak for the S&P 500

Key points:

• The S&P 500 has sustained above its 20-day average for 55 consecutive trading sessions
• Similar win streaks saw the benchmark index rise 93% of the time over the following three months
• Technology and industrials top the list of indexes with a lofty number of days above the 20-day average

Consistent trends are a hallmark of bull market environments

The S&P 500 has now closed above its 20-day moving average for 55 consecutive trading sessions, an impressive streak that reflects the kind of persistent buying pressure typically associated with strong bull market trends, rather than sideways or bearish conditions. 

As you may recall, I highlighted a similar pattern in the Nasdaq Composite in the report "An Impressive Win Streak for the Nasdaq Composite," which used a 10-day average and required 21 consecutive days above trend. I'm a big fan of trend consistency, which is why the 10-day version is a member of the TCTM Composite Confirmation Model. 

Similar win streaks suggest the uptrend in the S&P 500 will persist

Whenever the S&P 500 closed above its 20-day average for 55 consecutive trading sessions, the world's most benchmarked index exhibited a strong bullish bias, advancing in all but one instance over the following three months. Furthermore, returns in this time frame displayed significance relative to random expectations.

It's worth noting that three signals appeared during the Dot-com boom of the 1990s, a period frequently cited as a parallel to today's AI cycle. 

Over the following year, the S&P 500 experienced a decline of more than 10% on four occasions, while it rose by more than 10% in 11 instances, indicating a favorable risk/reward scenario. 

Other groups that have sustained above their 20-day average for an extended period

Indexes tied to technology and industrials have consistently remained above their 20-day averages for an extended period, reflecting the momentum driven by themes such as artificial intelligence and data center expansion. 

A rare occurrence for technology

For only the 11th time since 1954, the S&P 500 Technology sector persisted above its 20-day average for 55 straight sessions, a remarkable feat for a volatile sector. Similar signals saw the large-cap tech sector steadily rise over the subsequent twelve months.

Weight of the evidence 

The weight of the evidence, based on trading signals presented in research reports, continues to lean bullish, supporting a fully invested stance for investors.

What the research tells us...

In recent weeks, we've seen an increasing number of long-term breadth and momentum signals confirm the strength and durability of the current uptrend. Today's note adds to that growing list with yet another favorable signal: the S&P 500 has now closed above its 20-day average for 55 consecutive sessions. This type of persistent buying pressure is almost always associated with advancing markets rather than sideways or bearish phases; historically, when this scenario has occurred, the world's most benchmarked index has posted a positive return over the next three months 93% of the time, reinforcing the view that we remain in a healthy, sustained uptrend.