The U.S. equity markets have had a lot to celebrate in July, particularly since both the DJIA and S&P 500 recently eclipsed millennium milestones by closing above the 27,000 and 3000 levels, respectively.
They may soon be joined by the Nasdaq-100, as it approaches the 8,000 mark. So what happens next? Will these recent gains build upon themselves, or will equities need to undergo a digestion phase? Well, if history is any guide, for it’s never gospel, the overall advance should still have further to run.
Indeed, the eclipsing of new millennium milestones since the early 1970s have implied further advances 20, 40 and 60 trading days later for both the DJIA and Nasdaq-100 (NDX) that exceeded their averages for all observations. What’s more, the likelihood of a price rise for the DJIA improved to 77% 60 days after rising above each 1000-point level for the first time, versus 64% for all periods.
For NDX, the average price changes and batting averages post-millennium marks also improved vs. all observations.