How does the ASX 200 perform after a seven-day win streak?

The S&P/ASX 200 has staged a V-shaped recovery, climbing 2.8% above its pre-Liberation Day close on April 2 and 14% above its April 14 lows.

A seven-day rally from April 22 to May 2, with the index surging 5.4%, fueled this rebound. This raises the question: How common are such extended winning streaks, and what does market performance look like afterward?

Massive rallies

Since 2000, the ASX 200 has logged 40 instances of seven-day-or-longer winning streaks, delivering an average gain of 3.52%. The longest streak, a 12-day run in February 2015, gained 9.66%, marking the largest in the dataset. This rally was fueled by global monetary easing (including the RBA cutting rates to a record-low 2.25%), stabilising commodity prices, and robust corporate earnings.

Unlike datasets tied to volatility or selloffs, which often cluster around extreme events like the Global Financial Crisis or the pandemic, these winning streaks are spread relatively evenly over time, reflecting diverse market conditions.

The average, median and % positive for the 40 instances where the S&P/ASX 200 rallied for seven days or more

Post-streak performance is less predictable. One-month forward returns average a slight decline of 0.18%, while three-month returns edge up by 0.51%. Both periods show positive outcomes only 51% of the time, suggesting choppy near-term results.

The combination of a slight one-month decline, a modest three-month gain, and low consistency suggests that extended winning streaks often mark a peak in short-term momentum. Investors may face a period of consolidation or volatility as the market digests the rapid gains.

Returns improve at the six- and twelve-month marks, averaging 1.58% and 3.69%, suggesting sustained supportive market conditions driven by earnings, commodity prices, monetary easing etc. However, these periods are positive only 64% and 67% of the time.

The bottom line

Historical data reveals that such extended winning streaks, while not uncommon, often signal a short-term peak. Only 52% of All Ordinaries constituents are trading above their 200-day moving averages, signaling uneven market participation. Elevated volatility and mixed sector performance further caution that the rally's strength may be deceptive. Investors should tread carefully in this post-rally phase, particularly with global uncertainties—such as potential Trump tariff headlines — poised to spark sharp selloffs or rallies.