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This is a very simple indicator. We simply measure the total percentage gain of the S&P 500 over a five day period. Historically, large five-day momentum up moves have proven to be fairly reliable signals that the market is headed higher over the next year. Note that these signals have not been reliable since the bear market began in 2000. The tables below show the individual results.

FIVE-DAY PRICE MOMENTUM (SORTED BY PERCENTAGE CHANGE)


 
    S&P 500         Date    3 Months    6 Months    12 Months
5-Day Gains       Ending       Later       Later        Later


    +14.12%     10/11/74      +2.06%     +18.33%      +24.21%
    +13.17%     07/30/02      -2.30%      -4.03%       +9.52%
    +12.33%     11/02/87       0.00%      +2.27%       +9.11%
    +11.84%     06/01/70      +3.99%     +12.37%      +28.72%
    +11.55%     08/23/82     +14.48%     +26.42%      +40.18%
    +10.72%     10/16/02      +6.39%      +2.32%      +22.10%
    +10.67%     10/11/82      +8.41%     +15.37%      +26.67%
     +9.91%     03/21/00      -0.99%      -1.88%      -23.50%
     +9.18%     10/15/98     +18.69%     +26.29%      +19.09%
     +8.21%     03/18/03     +16.57%     +19.98%      +29.54%
     +7.79%     07/03/62      -0.59%     +12.79%      +23.80%
     +7.78%     09/28/01     +10.50%      +6.58%      -20.51%
     +7.69%     01/29/75     +10.84%     +14.14%      +29.57%
     +7.58%     09/20/74      -4.61%     +19.20%      +22.44%
     +7.50%     04/19/01      -3.08%     -14.38%      -10.27%
     +7.41%     05/05/97     +14.56%     +11.71%      +31.90%


Ave  +8.89%                   +5.92%     +12.25%      +15.54%






FIVE-DAY PRICE MOMENTUM (SORTED BY DATE)


    S&P 500         Date    3 Months    6 Months    12 Months
5-Day Gains       Ending       Later       Later        Later


     +7.79%     07/03/62      -0.59%     +12.79%      +23.80%
    +11.84%     06/01/70      +3.99%     +12.37%      +28.72%
     +7.58%     09/20/74      -4.61%     +19.20%      +22.44%
    +14.12%     10/11/74      +2.06%     +18.33%      +24.21%
     +7.69%     01/29/75     +10.84%     +14.14%      +29.57%
    +11.55%     08/23/82     +14.48%     +26.42%      +40.18%
    +10.67%     10/11/82      +8.41%     +15.37%      +26.67%
    +12.33%     11/02/87       0.00%      +2.27%       +9.11%
     +7.41%     05/05/97     +14.56%     +11.71%      +31.90%
     +9.18%     10/15/98     +18.69%     +26.29%      +19.09%
     +9.91%     03/21/00      -0.99%      -1.88%      -23.50%
     +7.50%     04/19/01      -3.08%     -14.38%      -10.27%
     +7.78%     09/28/01     +10.50%      +6.58%      -20.51%
    +13.17%     07/30/02      -2.30%      -4.03%       +9.52%
    +10.72%     10/16/02      +6.39%      +2.32%      +22.10%
     +8.21%     03/18/03     +16.57%     +19.98%      +29.54%


Ave  +8.89%                   +5.92%     +12.25%      +15.54%

NOTE: This research was originally published in 1998 by Dan Sullivan (The Chartist; 562-596-2385), who gave us permission to republish it. (We have added to it since it was originally posted here.)