US markets: 13 out of 15 weeks positive – Rally overheated?

Last Updated: 8. März 2024By

The US stock market has been running smoothly for months. Since the beginning of the year, the S&P 500 has gained about +8.5%, significantly more than in an average overall year!

Since the correction low last October, it has even gained 1,000 points or +24.3% – amazing!

Experienced investors know, of course, that the stock market is not a one-way street. The leading index S&P 500 has recorded gains in 13 of the past 15 weeks. This is an unusually long upward phase „in a row“.

S&P 500 weekly chart: 13 out of 15 weeks positive – rally overheated? Source: own illustration

Is a correction coming now? Despite the beautiful gains, some investors are worried that a large part of this rally could soon be lost in a correction. Is there anything to worry about?

No. There is no statistical evidence that a similarly strong rally in the past has resulted in a correction with a statistically significant probability. Of course, this does not rule out the possibility of a correction. But it does not make sense to worry about it.

However, it does make sense for you to take a look at the indicator that I have brought to the chart in the lower half. This indicator shows you the percentage of stocks in the S&P 500 that are trading above their 200-day moving average and thus in an uptrend. This percentage is currently at 76.60%.

Complete „bull cycle“ in the S&P 500 – further price gains are likely to follow! In mid-October 2023 it was only 23.60%, and at the beginning of 2024 it was already 81.60%. I am telling you this because you probably will not recognize it in the chart. And because this development is actually important for the further course of prices.

If the percentage of S&P 500 stocks in an uptrend manages to rise from below 25% to over 80% within a few months, this will have a very positive impact on the further course of prices for the S&P 500.

Probability of profit over 80% – invest in US stocks! In this case, the probability of further price increases for the S&P 500 after 6 and 12 months is over 80%. Therefore, if you own US stocks, you can look forward to medium- and long-term price gains.

Based on these statistically proven prospects, you should align your investment strategy, not with the potential risk of a short-term setback. This way, you have the odds on your side and leave counterproductive emotions out of the equation.

By the way, in my stock market service Voigts Global Profits, we always work with such statistically proven patterns. This gives us a tremendous knowledge advantage over other investors. In this way, we can also use trends better – and achieve significantly higher profits.