The S&P 500 edged up 0.13% to a fresh record, extending its winning streak to nine consecutive sessions despite higher oil prices. A further advance would mark a 10th straight daily gain, the longest run since 1995, and would also reinforce the strongest such stretch in the past year.
On longer horizons, the index is tracking towards a 10th consecutive weekly rise; if achieved, that would be the longest weekly run since 1985. In addition, the benchmark rose more than 16% across two calendar months in April and May, an outcome seen only five times since WWII. The article states it was produced with the help of an artificial intelligence tool and reviewed by an editor.
Historic Rally Sets New Records
We are watching the S&P 500 post its ninth straight gain, which is pushing the index into fresh record territory. A tenth consecutive gain would mark the longest daily run since 1995, putting this rally in a historic context. The market is also on track for its tenth weekly gain, a streak unmatched since 1985.
This sustained upward move has pushed market volatility to near-historic lows, with the VIX currently trading around 12.5. Such low volatility readings make options relatively inexpensive. We see this as an opportunity to buy portfolio protection at a discount before any potential market turbulence returns.
Evaluating Risk and Hedging Strategies
Market sentiment is also running hot, with the Fear & Greed Index now showing a reading of 85, firmly in “Extreme Greed” territory. Historically, such high levels of optimism can be a contrarian signal, suggesting the market may be vulnerable to a reversal. This reinforces our view that downside risks are growing.
In the coming weeks, we believe it is prudent to start hedging long positions. We are looking at buying S&P 500 put options or VIX call options to prepare for a potential pullback. Key catalysts like next week’s CPI inflation data and the subsequent Fed policy meeting could easily disrupt this calm market.
Past performance shows these powerful rallies are not always sustainable in the short term. While the streak in late 1995 was followed by more gains, it also preceded a notable market correction in early 1996. Therefore, we are not necessarily calling for an end to the bull market, but rather preparing for a period of increased volatility.
