The Dow Is Set to Make History Today

The Dow Jones Industrial Average (DJIA) is set to end October with a healthy 4.3% gain, which would mark the index's best month since gaining 4.8% in February. What's more, while it will be the Dow's seventh straight monthly gain -- a feat not accomplished in over five years -- the DJIA is pacing for the smallest return during a seven-month rally ever. Below, we take a look at previous monthly win streaks for the blue-chip index, and what that could mean for stocks going forward.

The last seven-month rally for the Dow wrapped up in April 2012. Prior to that, you'd have to go back more than 10 years, to early 2007, for a similar stretch. In fact, this will be just the third seven-month winning streak for the index since the turn of the millennium, and between 1983 and 2007, there was just one other such streak -- in June 1995, according to Schaeffer's Senior Quantitative Analyst Rocky White. 

As alluded to earlier, the Dow is pacing for a 13% gain, which would mark the smallest return during a seven-month rally on record. The biggest rally during the course of seven straight months higher was in December 1915, when the index surged 52.52%. The longest Dow rallies occurred in the mid-1930s and late 1950s, with eventual streaks of 12 months apiece.

More often than not, these win streaks stop after the seventh month, with the DJIA averaging a one-month loss of 0.69%, and ending Month 8 higher just 46.7% of the time. For comparison, the Dow has averaged a one-month anytime gain of 0.55%, going back to 1900, with a win rate of 58.4%.

However, three months after these win streaks, the Dow has outperformed. The index was up 3.13%, on average, and was higher 73.3% of the time. That's roughly double the DJIA's average three-month gain of 1.71%, with a win rate of just 61.2%. So, if past is prologue, the Dow could take a breather in the historically positive month of November, but resume its rally into 2018.

Six months after a seven-month win streak, the Dow was 3.92% higher, on average -- exceeding its average six-month gain of 3.46%. However, a year after these streaks, the Dow's average gain of 6.76% is lower than its anytime average one-year gain of 7.2%, and the win rate of 60% is smaller than its anytime win rate of 65.5%.