Historic market rise underway

The recent string of consistent gains is a rare event not seen in nearly 20 years.

By Anthony Mirhaydari Jul 23, 2013 2:20PM

Image Source, PhotolibraryThe stock market's performance this month has been one for the record books. After May's overenthusiasm, a two-month 6.4% pullback into June's low was all it took to recharge the batteries, clear out extreme sentiment, and clear the way for a run to new all-time highs. 


Professional traders loaded up in late June, piling into futures and options contracts that would pay big as the Dow Jones Industrial Average marched towards the 16,000 level and the S&P 500 charged towards 1,700.

 

Since June 25, the S&P 500 has moved higher 16 out of 19 sessions for a gain of nearly 8%. The two most recent losses were less than 0.4%. Not only have the price gains been consistent, there has been broad participation.

 

Add it all up, and the evidence suggests the gains will continue.

 

Returning to price, the folks at SentimenTrader note that the last time stocks posted such a consistent string of gains was back in 1995 (in March and again in September of that year). Six months later, the market was up another 13% on average. A year later, the average gain was more than 22%.

 

The performance was more mixed for examples in the 1960s and 1970s. So it's not a slam dunk analogue.

 

 

As for breadth, performance after a surge like we've seen has historically been more consistently positive. Since 1950, there have been 20 occurrences where market breadth has been as strong as it was in early July. In all 20, stocks were higher a year later by an average of 22%.

 

Now, to be clear, this is just looking at the market. The economy has its own issues. There are still unresolved structural issues with the government's finances, long-term entitlement obligations, the infrastructure deficit, the hollowing out of the middle class, overreliance on cheap money stimulus, and on and on.

 

But for now at least, Dow 16,000 and S&P 1,700 look achievable before the fiscal fights return to Washington in September.

 

Right now, an area of great potential are metals and mining stocks, represented by the Metals & Mining SPDR (XME). With cyclical, economically-sensitive stocks enjoying a surge of buying pressure, the XME is breaking up and out of a long multi-month downtrend.

 

 

Digging into the sector, steelmakers -- which have been heavily shorted -- are popping up in a big way. Stocks like Cliffs Natural Resources (CLF), U.S. Steel (X), and AKSteel (AKS) are or look ready to burst out of consolidation patterns on a flurry of frantic short covering. More than 36% of CLF's stock floatation has been sold short. It's 32% for X. And it's 28% for AKS.

 

I'm adding CLF, X, and AKS to my Edge Letter Sample Portfolio.

 

 

Disclosure: Anthony has recommended XME and AKS to his clients.

 

Check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​om​​​​​​​​​​​​​​​ and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.


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92Comments
Jul 23, 2013 3:20PM
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He predicts a market rise - time to sell.
Jul 23, 2013 3:34PM
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All this from Mr Doom and Gloom.....my guess he got hold of a good batch of weed....
Jul 23, 2013 4:18PM
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As we all know, there is a monumental difference between an investor and a speculator.  Both have their function.  It's very important to know who you are dealing with.  Anthony has stated more than once that he is not a believer in the "buy and hold strategy".  To a speculator, there is nothing wrong with constantly changing ones opinions.  He is in it "for the moment", hoping to capture quick returns.  If a person has followed Anthony's columns for any amount of time, they should be smart enough to know not to rely on Anthony for investment advice.  Whether his speculative advice actually pans out or not is beyond me.  I don't play that game.
Jul 23, 2013 5:43PM
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This guy should be ashamed of himself.  I sat out this tremendous run up because he made sense in his columns for over 8 months.  Now he is a stock market cheerleader.  Unbelievable!  I have made up my mind to never listen to another clown on the internet again because of his lousy advice. Unbelievable, this guy.  I can only shake my head in disbelief.  What a clown!
Jul 23, 2013 4:54PM
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Go back a read the junk you have written. Someone who listened to you would have missed many thousand of points or be trading selling at lows and buying at highs.

 

 

 

 

 

 

 

Jul 23, 2013 3:50PM
Jul 23, 2013 5:45PM
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Anthony litterally went from 18 straight months of doom-and-gloom predictions of a major market pullback (which never happened) to bullish predictions overnight. How does that happen?
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Jsut switch the word "Rise" with drop in the title, and you have Anthony writing a couple of weeks ago.

It's all a crapshoot, just look at Jubek's article..

Jul 23, 2013 6:44PM
Jul 23, 2013 6:09PM
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Tony, you should stick to articles like this- simply reporting after the fact. Your predictions are crap!

Remember your first one this year?

http://money.msn.com/investing/an-epic-bear-market-is-coming

 

Jul 23, 2013 4:03PM
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The banks are getting money from the Fed and being told to put it  the market. Fundamentals are not at work artificial support. Watch for derivative trouble to begin Aug/Sept and bank collapse could follow.  
Jul 23, 2013 6:25PM
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Markets rise and fall on the whims of PROFESSIONAL market manipulators. That is all we need to know.
Jul 23, 2013 3:09PM
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NOT really, Craze-man.
Its just Tuesday.  We all got to keep to a schedule.

Jul 23, 2013 3:59PM
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Here is one for you Mirhaydari buy B/A stock !  DIE BANK OF AMERICA DIE !
Jul 23, 2013 4:47PM
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Tony you are a "wrong way Corrigan" for sure! The market is topping out and there have been a few signs of that in the past weeks that you have missed altogether.  Consumers are "tapped out" and China, Japan and Europe are all disasters economically.  Second half of this year is going to be tough!

Jul 23, 2013 4:35PM
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I wouldn't have believed it if I didn't see it for myself but a Bear just morphed into a Bull right before our eyes.Touche Tony. I'm all ears now. Of course I think Tony lives in NY or near it so the heat wave we just went through might just have fried his brain a little. Or maybe he is just in Bear hibernation. Anyway it's good to see you be positive. I tire of all the negativity. 
Jul 23, 2013 6:00PM
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right, right...' The recent string of consistent gains is a rare event not seen in nearly 20 years'

 

and neither was QE1, QE2, and QE3, what does that tell 'ya?? can you imagine if the market gains were due to NATURAL economic recovery without gov't interference?? nuff said.

Jul 23, 2013 3:12PM
Jul 23, 2013 8:13PM
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Historic rise in market underway yet cities like Detroit are failing while inflation grows unchecked. All that welfare to Wall Street while Main Street continues to struggle. Bernanke and the Fed Reserve started something they don't know how to stop, the addiction they created is out of control. Sooner or later, we're  all going to pay the Piper for a overinflated market and dollar.
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[BRIEFING.COM] The stock market continued its strong start to the week with a broad-based Tuesday rally that sent the S&P 500 higher by 0.5%. Nine of ten sectors registered gains while the benchmark index extended its week-to-date advance to 1.4%.

Equities received an opening boost from a pair of economic data points that crossed the wires this morning. An in-line CPI report suggested inflationary pressures remain contained, while a better than expected Housing Starts report ... More


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