Since 2009 every time stocks have 3-week losing streak, the market does this next

VIDEO1:1601:16
Why stocks are set to bounce back after three weeks of losses
Key Points
  • Since 2009 the stock market has suffered a three-week losing streak 18 times.
  • A month later stocks bounce back, according to a CNBC analysis of Kensho, a data tool used by Wall Street banks and hedge funds to uncover profitable trades from market history,

Stocks began the truncated trading week after Memorial Day on a negative note. All three major indices finished Tuesday lower, and concerns about bond yields sent the Dow Jones Industrial Average down again on Wednesday.

The bearish action followed three straight weeks of declines for the as the index shed nearly 5% in the past month.

But history says current losses could precede future gains.

Over the past decade, the has logged three consecutive weeks of losses on 18 other occasions, according to a CNBC analysis of Kensho, a machine learning tool used by Wall Street banks and hedge funds to mine market history for potential trading profits.

A month after these declines, stocks tend to bounce back, Kensho finds.

The S&P 500 recoups 3.4% on average, trading positively 83% of the time.

The top sectors following these episodes: Materials, Tech and Consumer Discretionary, which all gained at least 4% the following month.

After the S&P 500 falls 3 straight weeks, stocks tend to bounce back.
Kensho
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VIDEO1:0501:05
Consumer discretionary's strong performance bodes well for the rest of 2019
Key Points
  • Since 1990, the consumer discretionary sector has a perfect track record — five for five — of posting big full-year returns after starting the first four months of the year strong.
  • Amid the flare-up in the U.S.-China trade war, some of the largest holdings in the consumer discretionary index also are among stocks Wall Street has been recommending to clients.