According to the report from research firm SentmenTrader, regardless of the time frame, the dow jones industrial average index (DJIA) has been performing very strongly recently, and this momentum may indicate good news in the coming months.

Jason Goepfert, a senior research analyst at SentmenTrader, pointed out in the report on Wednesday that in the past 250 trading days, the Dow Jones had risen on 152 trading days, with a win rate close to 61%. This continuous uptrend has only occurred twice in the past, in April 2010 and May 2018, both of which were followed by roughly six months of choppy trading.

However, this momentum is not just a short-term phenomenon. Goepfert stated that from a longer-term perspective, in the past 100 weeks, the Dow Jones has risen in over 60% of the weeks. Although this proportion is not extreme compared to the past 40 years, it indicates a significant improvement in market conditions compared to the "tough period" of 2022.

Moreover, in the past 60 months, the Dow Jones has recorded gains in 63% of the months, although this proportion is not historically the highest, it is close to the upper limit of the past 124 years. In addition, over the last 15 years, the Dow Jones has seen gains in 80% of the years.

Goepfert wrote that overall, the Dow Jones has shown an impressive and sustained momentum across daily, weekly, monthly, and yearly time frames.

He noted that as this momentum is not limited to a specific time frame, the current momentum level is historically rare, ranking in the top 6% in all data since 1900. Excluding the internet bubble period of 1995-2000, the current reading would place it in the top 2% historically.

Goepfert also mentioned that some sectors may show signs of weakness after extreme upward momentum, such as the utility sector, but this phenomenon has not appeared in the Dow Jones. Data shows that when the average number of rising periods exceeds 66%, market declines are rare, and the Dow Jones typically performs strongly in the next nine months.

Another analytical approach is that Goepfert found that the Dow Jones rising at least 60% in daily, weekly, monthly, and yearly timeframes is extremely rare, having occurred only six times. However, the performance following this signal is not always ideal, especially after the 2018 global financial crisis, where the market performance was mediocre. The last signal in April 2018 also failed to bring significant profits.

Combining these two studies, Goepfert found that there were only two instances where the Dow Jones rose over 60% in all four timeframes, with an average of 66% or higher in the number of rising periods. When these two signals appeared in 1959, the Dow Jones continued to rise for several months but then entered a period of significant volatility, lasting until 1963 when a new sustained trend began. A similar situation occurred in 2017-2018, where the index continued to rise for several months before entering years of stagnation until the market recovery brought on by the pandemic.

So, how should investors view these signals?

Goepfert concluded, "The buying pressure the Dow Jones is experiencing across all timeframes is indeed historic. In most cases, this signals a decent market performance in the next 6 to 9 months. However, there are not many similar historical precedents beyond that, especially those of sustained growth." He also pointed out, "The period of the 1995-2000 internet bubble was the only one where momentum was able to persist for a long time, and bullish investors need to hope that the current ai revolution can rival the internet bubble of that era."

Editor/rice