ETF Prophet

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Dave Evans

The Down Jones is close to hitting the headlines with a close above the 12,000 level as the the seemingly inexorable upwards grind continued. 

I happened to glance at a weekly chart of the Dow and was quite amazed what I saw. I hadn't realised the recent rally had been so consistent on a weekly basis. 

28-01-2011 07-49-02
If this week closes higher as looks likely, this will be the 9th consecutive winning week. 

Since 1929 there have been over 4200 weeks in total with a 56% chance of a week being positive  for an average gain of 0.12%. 

By contrast there have been just 23 weekly winning streaks of 9 or more with the last occurring back in 1995. The longest streak was 14 weeks back in 1965 (Actually most of the longer streaks ocurrred in 1964 and 1965). 

With so few instances its hard to read much into this other than to highlight that a streak this long is relatively rare. The next week closes higher 59% of the time with an average return of -0.2%. However if you take out the biggest loss in the 1930s (-5%), the next week is break even. 

[Update Friday PM] – Well I spoke too soon, with the Dow dropping 166 points on Friday meaning the 9 week streak never happened. Perhaps it underlined how rare a 9 day streak potentially was. For the record, an 8 day weekly streak (which the Dow ended on) had a 51% chance of being positive by Friday close from last Friday with an average return of -0.21%. 

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