Like the S&P 500, the Dow Jones Industrial Average closed out June with 12 consecutive months of positive momentum
Replay Available - Inflation and Relative Strength Investing Webinar: In this webinar from Tuesday, June 29th, we explored key areas of the market that have shown strong growth potential, and which areas of the market may be poised to participate in an inflationary environment.
Given Monday’s Were You Aware, which looked at forward returns after the S&P 500 (SPX) experienced 12 months of positive monthly momentum, it may not be a surprise to find the Dow (DJIA) in the same boat.
In fact, the Dow has experienced 12 months of positive momentum 12 times since 1905, with the most recent occurrence taking place almost exactly four years ago (6/30). Historically, the Dow has continued this streak past the one-year mark 82% of the time; the greatest run came in 1986 with 23 consecutive months of positive monthly momentum. As you may expect given the lead up and precedence of the SPX study, historically this has also been a bullish sign for markets. DJIA posted a loss in only two of the 12 calendar years following a streak of 12 consecutive months of positive momentum. Furthermore, the mean and median return were 14.92% and 14.01%, respectively, which are both above the longer-term market averages. Of the two negative years, note that each came after instances where the momentum streak ended at the 12-month mark or one month thereafter. Any streak of 14 or more months had a positive return from its initial 12-month date. The charts below help depict the rarity and forward performance, respectively, of past occurrences.
