A series of increases on the American stock exchange that has not been seen for a long time. Capitulation of share sellers?

Recent events may go down in Wall Street history because on S&P 500 indexes or Nasdaq There have been a series of growth days that we have not seen for a long time, and they have not been repeated very often in the recent history of quotations. Yesterday, the S&P 500 continued its strong rebound that began at the end of October, marking the seventh consecutive session of rising prices. The last time such an event took place was just over two years ago, i.e. in October 2021. Then, the market closed at a higher level seven times in a row. However, a longer series was recorded during increases after Covid hit financial markets. In August 2020, prices rose continuously for 9 sessions.

Nasdaq 100 futures with even better results

In turn, futures contracts on the Nasdaq 100 have already had eight growth sessions in a row, which is the best result also since October 2021. Back then, we could observe 11 growth sessions before a correction appeared. However, the previous 8 upward sessions took place in June 2020. Therefore, the above may show how relatively rare a phenomenon we may be dealing with and leads to considerations of what happened that we can currently observe such unusual market behavior.

Does short squeeze and falling profitability help growth?

In short, stock markets may rise because the US economy will probably not get any better, and currently things are not so bad that stock markets can fall. The first part of this turnaround means that it may be difficult to see further increases in US bond yields, which have been putting pressure on the stock market until recently. Recently the whole world was talking about 5% on 10-year US bonds, which was to put pressure on the stock market. Currently, the pressure to increase profitability seems to be lower, which may support valuations in the main stock indices and also lead to mass covering of short positions. This is why there may be such a large upward movement dynamics.

Apart from the above, nothing has happened to cause investors to rush into buying US stocks. The results are not so impressive as to explain the current increases, and there is no new breakthrough AI, as at the beginning of this year, there is only a decline in profitability and hope that Fed will not raise rates anymore, and bad data from the economy are good data for the markets? Probably only for a while.

Will the dollar join the game?

The only thing missing from this risk appetite puzzle is the US dollar. While yields have fallen and stocks have risen, the dollar remains at relatively high levels. However, it may only be a matter of time before it also moves to lower levels (USA index), which may add further fuel to risky assets in the last months of this year.