Trader Talk

Great month for stocks, but history says we might not be exhausted

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Traders work on the floor of the New York Stock Exchange, Feb. 20, 2015.
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A five percent month. Just about everything is up five percent this month, with the NASDAQ the leader of the pack:

Major Indices this Month

Nasdaq +7.3%

Russell 2000 +6.2%

DJI +5.9%

S&P 500 +5.7%

S&P Midcap +5.5%

This doesn't happen that often: the S&P has been up five percent or more in a month only 10 times since the financial crisis in 2009, according to our partners at Kensho.

What's interesting is what happens in the following month: the S&P is UP 9 of the 10 times. What's more, it's up an average of 2.4 percent.

This is slightly counter-intuitive. You might think that after an unusually strong month the market might take a breather.

That would make sense, but what this data indicates is that a five percent or more rise in one month will not sufficiently exhaust upward momentum.