The market has only done this four times in 36 years, and it could be ‘very bullish’

  • On Tuesday, the S&P never once dipped below its Monday high.
  • On Monday, it never traded below the highest level it hit on Friday.
  • These unflinching moves higher are rare.

It's been a nice start to the week for stocks, to say the least. The S&P 500 rose by 0.61 percent on Tuesday, after jumping 1.08 percent on Monday.

What's even more notable than the size of the moves, however, is just how confident the market has appeared.

On Tuesday, the S&P never once dipped below its Monday high. Likewise, on Monday, it never traded below the highest level it hit on Friday.

These unflinching moves higher are rare. Going back to the beginning of 1981 (the last year for which FactSet offers continuous daily range data), the S&P has seen a low above the prior day's high in only 1.5 percent of sessions.

For it to happen two days in a row is truly anomalous. The S&P spent the entire day above the prior high for three-straight sessions in mid-February; before that, it saw two back-to-back such sessions in April. And that's it, at least in the past 36 years.

Such a move can be called "a window or a gap higher," Rich Ross, head of technical analysis at Evercore ISI, said Tuesday on CNBC's "Trading Nation." "Why is that so difficult? Because think about how big the S&P 500 is. That's a lot of market cap to really leap higher. This is like the 'Shark Week' video of the great white leaping out of the ocean."

"It's very bullish," Ross added. "It speaks to that element of surprise, and to the urgency of investors to get back into a trend that they perhaps had stepped out of."

Indeed, this week's gains come following two months in which stocks simple treaded water, as investors awaited the French election with bated breath. A decisive showing for right-winger Marine Le Pen would have made a potentially destabilizing French exit from the European Union more likely, but that event was averted, at least for now, to the apparent relief of investors around the globe.

At the same time, there appears to be something more than sentiment driving the move. On Monday, even as the S&P rose by more than 1 percent, it traded in a mere 0.3-point range. That's the smallest range seen on an up 1 percent-plus day in at least the past 36 years, according to a CNBC analysis of FactSet data.

The decisive-looking market moves, then, may just be yet another consequence of one of the biggest macro trends in market recently: the striking decline of volatility.

That is to say, it's easier for the S&P to avoid moving below its prior day's high when it moves around so little to begin with.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more