Has the S&P500’s 9-Day Rally got Further to Run or Bear Trap Rally?

The sample size is there, where since 1929 we've seen 29 occurrences of 9+ consecutive daily positive closes, but aside from 2004, these occurrences all came before 1997 - the market structure has obviously changed significantly since 1997, with high-frequency trading accounting for 70-80%+ of the daily SPX volume, while options flows are also a big influence (50% of this from 0DTE), as are risk parity & vol targeting funds.

Interestingly, only 3 of the 29 occurrences (since 1929) happened when the US was in or about to hit a recession.

It's worth pointing out that on Friday 80%+ of SPX companies will be moving past their share buyback blackout period and will subsequently be free to buy back stock again. Essentially, the biggest buyers of US shares are the companies themselves - they are non-price sensitive - and buybacks have a big effect on suppressing realised volatility - which would then see the vol-targeting players increasing equity allocations - where buybacks typically correlate well with SPX returns.

Am I bullish? Not especially, and we’re seeing better selling in S&P500 futures today. However, tactically I would have greater conviction fading the rally into 5850... but let's see the tape, price action and what the world looks like, if and when we get there... any US hard data point from here could trigger a big response from a market that has reduced tail risk hedges and pushed out the next Fed cut date (to July) and its recession timelines... plus, while the narrative on tariffs is skewed positive, trade deals are not free trade agreements, and as such they can’t truly be trusted... we think of them like a ceasefire.

That said, the move higher is obviously very powerful, with good breadth and participation (88% of SPX co's are > the 20 day MA & 50% of co's closed on Friday at a 4-week high). We also see various measures of equity implied volatility coming back to their 12-month averages (indicative of lower 10- and 20-day SPX realized vols) - a clear trend in positive reactions from stocks on the day of reporting, buybacks about to kick in, and price triggering buy entries for CTA's on SPX and NAS100 futures.

We have to be open-minded to further upside in equity - falling in love with a view in a market raging higher hurts a leveraged trader... you have to trade the collective flows and respect what price is saying. For traders, price is the only opinion that truly matters.