The S&P 500 and Dow Jones Industrial Average have powered higher since stocks encountered their last batch of turbulence in early September.
And if the rally continues through Friday’s close, it will mark the sixth straight weekly gain for both, what would be the longest winning streak of the year, according to Dow Jones Market Data.
After a winning streak of six weeks or more, stocks have tended to keep climbing, Dow Jones Market Data showed. But returns during the following three months have been relatively muted, with an average gain of 1.6%. Meanwhile, stocks have only been higher 65.4% of the time.
There’s reason to expect the market might be due for a pullback here, said Ryan Dykmans, chief investment officer at Dunham & Associates Investment Counsel.
While breadth beneath the surface has continued to improve, several indicators of investor sentiment are beginning to look stretched, Dykmans said, including positioning in the options and futures markets. Also, gauges of implied volatility in the equity and bond markets remain elevated, pointing toward anxiety tied to the upcoming presidential election.
“I don’t think that risk and uncertainty is fully priced in today,” he told MarketWatch during an interview. “I do think it’s looking toppy.”
Ken Jimenez contributed reporting