The S&P500 rose 8.4 points on Friday and closed the week up 0.3%. More importantly, it was the 6th consecutive weekly gain for the index. Note, the index has not registered a weekly loss in 2013. The question in everyone's mind is whether this winning streak is going to continue or come to an abrupt end. Despite my earlier prediction that the S&P500 is set-up for a correction, I am betting my money that the S&P500 will close lower this coming Friday. Two reasons (1) lack of news and (2) statistics.
The economic calendar in the US is pretty light. The most watched data will likely be Retail Sales (Jan) on Wednesday, weekly Jobless Claims on Thursday and Michigan Sentiment (Feb) on Friday. Retail sales should not surprise anyone given that January comps from retailers last Thursday already surprised to the upside. Weekly claims do not move a needle unless it moves by a lot, which is not likely. Michigan sentiment, if anything, should surprise to the downside (remember the gas price). The corporate news is also light. There are bunch of earnings but they are not likely to impact the market. Also most of Asia is closed for the Chinese New Year. Given a dearth of news, or more specifically positive news, market will likely focus on negative news (sequestration, high oil/gasoline price, currency war, tired bull market, insider sell-off, noise from the Fed, European headlines including election in Italy and political turmoil in Spain) because investors are looking for an excuse to sell.
Regarding the statistics, since 1974, there have been only 10 instances when the S&P500 has registered 7 or more weeks of gains (7 weeks: 25-Aug-78, 18-May-07, 14-Jan-11; 8 weeks: 30-Jan-76, 10-Sep-93, 20-Jun-97, 20-Mar-98; 9 weeks: 1-Sep-89, 23-Jan-04; 12 weeks: 20-Dec-85). That's just 0.49% of the total. The last time, the 7th consecutive weekly gain happened was the week ending January 14 2011. That occurred on the backdrop of QE2, which was a huge surprise to the market.
