Six Higher Highs on Monthly S&P Chart

The table below highlights every instance since 1930 when the stock market initially recorded six consecutive months of ‘higher highs’. S&P500 data is used from 1962 to present, while Dow Industrials data is utilized prior to 1962 given the lack of high-low-close data for the S&P. Note that in every case but one, the market either exceeded the most recent high the following month, and/or the market closed higher the following month. In only two cases out of twenty-six did neither occur. This setup has already been triggered but won’t go into effect until the end of the month.

Six Consecutive Higher Highs on Monthly Chart
01/31/11… ???
09/30/09… Higher High Next Month
01/31/07… Higher High Next Month
04/28/06… Higher High Next Month
02/27/04… Higher High Next Month
03/31/99… Higher High Next Month
06/30/95… Higher High Next Month
04/30/91… Higher Close Next Month
09/29/89… Higher High Next Month
04/30/87… Higher Close Next Month
03/31/86… Higher High Next Month
01/31/83… Higher High Next Month
10/31/80… Higher High Next Month
06/30/75… Higher High Next Month
05/31/72… No Higher High or Higher Close Next Month
03/31/67… Higher High Next Month
05/28/64… Higher Close Next Month
04/30/63… Higher High Next Month
04/28/61… Higher High Next Month
09/30/58… Higher High Next Month
03/31/54… Higher High Next Month
12/31/49… Higher High Next Month
01/31/46… Higher High Next Month
05/31/45… Higher High Next Month
02/27/43… Higher High Next Month
11/30/36… No Higher High or Higher Close Next Month
09/30/35… Higher High Next Month

There’s another potentially even more interesting fact about 6+ higher monthly highs. When the streak is finally broken and the market puts in a lower monthly high, it usually represents a buying opportunity. This long a streak of higher monthly highs usually means buyers stand ready to buy the first pullback. The table below lists every occurrence since 1930, beginning with the date when the S&P (or Dow prior to 1962) put in a lower monthly high after six or more higher highs and followed by the performance of the stock market over the following month…

Six Higher Monthly Highs followed by Lower Monthly High
02/26/10… SPX +5.9% one month later
03/30/07… SPX +4.3% one month later
06/30/06… SPX +0.5% one month later
04/30/04… SPX +1.2% one month later
06/30/99… SPX -3.2% one month later (higher close five months later)
03/29/96… SPX +1.3% one month later
05/31/91… SPX -4.8% one month later (higher close three months later)
11/30/89… SPX +2.1% one month later
05/29/87… SPX +4.8% one month later
09/30/86… SPX +5.5% one month later
07/29/83… SPX +1.1% one month later
12/31/80… SPX -4.6% one month later (higher close three months later)
08/29/75… SPX -3.5% one month later (higher close two months later)
06/30/72… SPX +0.2% one month later
06/30/67… SPX +4.5% one month later
06/30/64… SPX +1.8% one month later
07/31/63… SPX +4.9% one month later
06/30/61… Dow +3.1% one month later
09/30/59… Dow +2.4% one month later
05/31/55… Dow +6.3% one month later
07/31/50… Dow +3.6% one month later
03/30/46… Dow +3.5% one month later
07/31/45… Dow +7.0% one month later
08/31/43… Dow +2.6% one month later
12/31/36… Dow +3.3% one month later
12/31/35… Dow +3.7% one month later

In 22 out of 26 occurrences, or 85% of the time, the stock market closed higher the following month, significantly above the 59% random chance. Also note that in the four instances in which the market closed lower the following month, we still saw a subsequently higher monthly close at some point within the next six months. Put another way, the price pattern above has almost always (25 out of 26 times) led to a subsequently higher monthly close at some point over the next three months, and usually the next month.  That’s something to keep in mind when the string of higher highs is finally broken.

Categories : Archived EOD Commentary, End-of-Day Commentary

 Print This Post