S&P 500's 9-Day Climb Not A Recession Signal, Argue Analysts Amid Conflicting Research: 'Simply Wrong/Lazy Analysis'

After the S&P 500 notched a nine-day winning streak on Friday, it sparked a debate among market experts. While some believe that it could be a precursor to a recession, others vehemently disagree, citing historical data to support their arguments.

What Happened: The Founder and President of Rosenberg Research & Associates Inc., David Rosenberg, highlighted the rarity of such streaks and their historical association with recessionary periods.

According to Rosenberg, a consecutive nine-day streak has occurred only 0.25% of the time in the past century. Labeling it as a “3 sigma event,” he claimed that “80% of the time this dynamic happened in recessionary environments …not to mention just ahead of the October 1987 crash!” This led him to question the current “bullish” market sentiment.

However, Ryan Detrick from Carson Research countered this in a May 5 post, calling it “simply wrong/lazy analysis”. According to him, such nine-day streaks have occurred only three times during a recession out of the total 29 nine-day streaks since 1928.

This starkly contradicts Rosenberg’s claim of an 80% correlation.

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Why It Matters: This rare winning streak from the S&P 500 follows a complex economic backdrop. While investors assess the potential of a future rate cut and inflation, consumer spending and corporate earnings data have been positive.

However, the contradicting views from Detrick and Rosenberg underscore the challenge in predicting market movements, as the historical data can never help in developing definitive conclusions but just offer some insight into old patterns.

After the end of the nine-day streak, the S&P 500 index was out of the correction zone, just down 7.5% from its record high of 6,147.43 points, scaled on Feb. 19. Dow Jones was 8.33% lower than its 52-week high of 45,073.63 points and Nasdaq 100 was 9.54% lower than its previous high of 22,222.61 points.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Friday. The SPY was up 1.48% to $566.76, while the QQQ advanced 1.48% to $488.83, according to Benzinga Pro data.

The futures of Dow Jones, S&P 500, and Nasdaq 100 were trading lower on Monday.

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