The stock market’s most hated rally continues to strengthen, and the tape is starting to look historically unusual.
The Nasdaq Composite (^IXIC) is now enjoying a 13-day winning streak, a streak it has only matched once in four decades. The Philadelphia Semiconductor Index (^SOX) has won 13 days in a row only once more in data going back to 1994, while the Technology Select Sector SPDR Fund (XLK) has managed it only twice since its launch in 1999.
Those streaks are rare. The scenario is even stranger.
Key markets including the S&P 500 (^GSPC), Nasdaq Composite, Russell 2000 (^RUT), Dow Transports (^DJT), SOX and XLK are hitting new records. That makes this look less like a bounce on the mat and more like a market that continues to refuse to back down.
That helps explain why this rally remains so hated. In a recent interview, Trade to Close founder Olivia Voznenko said the bearish signal earlier this year – before the Iran war sell-off – was that “there was no news in the blue sky.” But as she said, “it’s not the news, it’s how traders trade the news.”
The weekly statistics tell a similar story.
The S&P 500 is on track to post its third consecutive weekly gain of more than 3%, something not seen since November 2002. The Nasdaq Composite, SOX and XLK are also notching the kind of three-week gains last seen from the post-dot-com crash lows, when technology was still widely regarded as failed and uninvestable.
The current expansion is also notable. The iShares Expanded Tech-Software Sector ETF (IGV) just had its best week since October 2001, a sign that this rally is no longer just about the semi-finals.
These historical echoes are encouraging, but they do not fit perfectly. Unlike the 2001 and 2002 episodes, stocks are now hitting new highs, allowing for a less convenient comparison: March 2000, when a similar burst of momentum came near the above of the dotcom boom, not the beginning of a new and lasting bullish leg.
And there’s one more wrinkle hidden beneath the surface. Market breadth has yet to fully confirm this breakout, even with the S&P 500 at new highs. Therefore, the rally is not yet getting the go-ahead in all corners of the market, as concentration concerns rise to the surface again.
Still, the tape has changed.
During these 13 days, the market no longer treats strength as something to sell. It builds on this and encourages traders to buy even the shallowest dips. And Voznenko’s phrase remains the simplest way to read what is happening now: “It’s not the news, it’s how traders trade the news.”