Streaks are, eventually, made to be broken. Nevertheless, I feel we are on borrowed time now that we have had eight-straight up days for the Dow. We haven't had nine up days this century and you have to wonder why this time we'd break that streak.
I know last night I was struggling right until the closing bell to figure if it were worth it to even bother to mention the streak. But it is pretty instructive to go back to when we were able to go up for nine consecutive days last and that was in November of 1996, truly the halcyon days of the bull market, when you had a combination of tech, pharmaceutical and bank stocks rallying. It was the beginning of the Internet and the ascendance of the personal computer and a bizarrely positive period in the evolution of the drug industry when a ton of what turned out to be blockbusters were approved. We had gridlock and we also had a budget deficit that was being pared radically and we had the peace dividend. We were between international crises. The Mexican bond market had collapsed two years before. The Asian contagion, the Russian Ruble Wreck and Long Term Capital hadn't happened yet.
In short, it was a wonderful time to own stocks.
We do not have those circumstances now and instead we just have a flood of liquidity and some excellent earnings.
Just how we hit the eighth-straight day yesterday was instructive for how this Dow got to be up double digits already. We got great news from Merck (MRK) about a possible breakout anti-cholesterol drug and we got rumors of a gigantic order for Boeing (BA). Plus, Wal-Mart (WMT), which had freaked us out about February earlier and also had dealt with some leaked e-mails that were extremely negative about the beginning of that month, told us that things were back to normal once again.
We just keep getting good component news. Now, as my friend and colleague Matt Horween informs me, we could be ready for a breakout for another Dow component, Verizon (VZ), and when Verizon goes up it doesn't take long for AT&T (T) to follow.
Each day something percolates.
Now we all know that without more news we are just playing the multiple expansion story, meaning that we are bidding stocks up on the same information over and over again, stretching the valuations as we do it.
But unlike other periods where I have seen this kind of multiple expansion, we certainly weren't stretched at the start of it.
That's why, although it's terrific to have had the longest streak of the millennium, I do believe we need to cool off a bit. The only reason we haven't, of course, is that everyone wants it to cool, which is precisely why it hasn't happened yet.
So, congrats market, eight-straight days. But nine? Unless we have that same set of delicious circumstances developing, and I just don't see it, the breather may, at last, be here.