-The S&P 500 has posted gains for 8 consecutive sessions, up 8.7% cumulatively.
-It has moved above its 50-day moving average for the first time since February, but remains 2.5% below its 200-day moving average.
-Since 1927, in instances where the S&P 500 rallied for 8 consecutive days while still trading below its 200-day MA, the average forward return was -3.13%.
-Two weeks after such streaks, the index averaged a -0.72% return, with positive outcomes in only 38% of cases.
-Historical data suggests rallies below long-term moving averages often signal temporary bounces, not sustainable trends.
Opinion
-The rally below the 200-day moving average is likely a short-term rebound.
-Historical data shows weak follow-through, with limited upside.
-Caution is warranted due to elevated short-term correction risk.
Core Sell Point
Despite recent momentum, history warns that rallies below key moving averages tend to be short-lived—highlighting the need for active risk management.
Today, the S&P 500 notched its eighth straight day of gains, bringing its cumulative return during the streak to an impressive +8.7%. This marks the first such streak since last November, and if gains continue tomorrow, it will represent the longest consecutive advance since 2004.
Interestingly, the index has now climbed above its 50-day moving average for the first time since February. However, it still trades about 2.5% below its 200-day moving average—a threshold many technical analysts view as critical for confirming a long-term trend reversal.
Historical analysis by @SubuTrade offers perspective: since 1927, there have been only 8 instances when the S&P 500 closed higher for 8 consecutive days while remaining below its 200-day MA. The short-term outcomes were generally disappointing: the average return over the following month was -3.13%, with positive returns in only 50% of those cases. More notably, within two weeks after such streaks, the average return was -0.72%, and gains were seen in only 38% of cases.
This pattern suggests that current strength may reflect a temporary bounce rather than a sustained breakout—especially when long-term moving averages remain unbroken.
Conclusion While the current rally inspires optimism, historical evidence urges caution. Investors should view the 200-day MA as a critical technical level and prepare for potential near-term volatility. Proactive risk management will be key as the market tests whether this rally can transition into a lasting uptrend.
[Compliance Note]
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The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.
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