"Don't short easily"! S&P posts a rare eight-week winning streak in 70 years, with Wall Street's highest target at 8,250 points.

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The strong rebound in US stocks has evolved into the hottest market narrative of the summer. The S&P 500 Index has risen for eight consecutive weeks, marking the second strongest eight-week gain since 1952, now only about 6.5% away from the important milestone of 8,000 points for the year, fueling a heated discussion on Wall Street about a "melt-up".

Both the S&P 500 Index and the Nasdaq Composite Index hit new historical closing highs on Tuesday. Micron Technology surged nearly 20% in one day, recording its largest single-day gain since 2011 and becoming the twelfth US company to reach a market capitalization of one trillion dollars. The Dow Jones Industrial Average fell slightly, but still closed at its second-highest level in history. The S&P 500 closed at 7,519.12 points.

The ferocity of the current rally has left some investors uneasy. eToro US investment analyst Bret Kenwell said in an interview that the current market feels "like we’re experiencing a melt-up". Michael Kramer of Mott Capital Management noted that Micron’s surge was largely driven by a "gamma squeeze" in the options market, raising doubts about its sustainability.

However, historical data and earnings fundamentals provide support for the bulls. Ed Yardeni, founder of Yardeni Research, recently raised his year-end S&P 500 target to 8,250 points, the highest forecast among Wall Street peers; Goldman Sachs also raised its S&P target to 8,000 points. Historical backtesting shows that after all instances of eight consecutive weekly gains, the probability of the S&P 500 posting a positive return one year later is as high as 89%.

Eight Weeks of Gains, Rare in 70 Years

According to Dow Jones market data, this eight-week winning streak for the S&P 500 is the longest since December 2023. Analysis from Bespoke Investment Group further revealed that this eight-week cumulative increase of 17.3% marks the second strongest eight-week rally since 1952, making it extremely rare in over 70 years of history.

Bespoke tracked every instance in S&P 500 history where eight consecutive weekly gains occurred and found: the probability of a positive return in the following month is 74%, in three months 74%, in six months 74%, and in one year as high as 89%, with a median one-year return of 11.25%. Focusing on scenarios where the eight-week gain exceeded 15%—which is closer to the current situation—the probability of a positive return one year later rises to 100%, with a median gain of 17.57%.

Melt-Up Signals: Semiconductors Lead, Options Add Uncertainty

"Melt-up" typically describes the final sprint of an out-of-control bull market, in which stock prices soar rapidly driven by sentiment, and valuations far exceed fundamentals. The classic case is just before the Nasdaq peaked in March 2000—between October 1999 and March the following year, the index nearly doubled.

In the current market, the semiconductor sector is at the core of melt-up discussions. Bret Kenwell pointed out that semiconductor stocks are experiencing their strongest performance period ever recorded. Micron’s performance on Tuesday is especially typical: it surged almost 20% in one day, joining the trillion-dollar market cap club. Some Wall Street traders believe this was mainly driven by a large number of investors buying bullish out-of-the-money options.

Michael Kramer characterized this as a "gamma squeeze"—where options market makers unintentionally amplify stock price gains when hedging their positions. "Micron is currently experiencing a huge gamma squeeze, and no one knows how long this will last," he said.

FEMO, Not FOMO

Ed Yardeni gave a completely different interpretation of this rally, suggesting that simply focusing on the pace of the gains might obscure more critical information.

He pointed out that in periods of irrational exuberance, stock price increases usually far outpace earnings expectation growth; but 2026 is quite the opposite. As of last Friday, the S&P 500 Index had risen 9.2% year-to-date, while constituent stocks’ forward earnings expectations collectively rose 14.4% in the same period, causing the index's forward price-earnings ratio to drop by more than 4%.

Ed Yardeni defines this phenomenon as "FEMO"—or "fabulous earnings momentum"—to distinguish it from sentiment-driven "FOMO" (fear of missing out). "Analysts have raised their earnings expectations because hard data and company guidance have given them ample reason," he wrote in his commentary.

Based on this assessment, Ed Yardeni recently raised his year-end S&P 500 target to 8,250 points, currently the highest prediction among Wall Street peers. Goldman Sachs also raised its S&P target to 8,000 points.

The Road Ahead: 8,000 Points Not Out of Reach

According to Bret Kenwell, unless a blockade of the Strait of Hormuz by Iran triggers a global economic recession, it's not far-fetched for the S&P 500 to hit 8,000 points or even higher this year—the index is now only about 6.5% away from this level. "When you see this kind of market, it's easy to think a pullback will come anytime," he told MarketWatch, "but sometimes this kind of rally can last longer and go further than you expect."

The dual support from historical performance and earnings fundamentals is making more and more market participants cautious about shorting easily. Bespoke data shows that after an eight-week rally ends, the S&P 500 has a positive return probability of 89% over the following year; and when the eight-week gain exceeds 15%, the winning probability rises to 100%.

Risk Warning and DisclaimerThe market is risky, and investment should be made with caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are appropriate for their particular situation. Investment based on this is at your own risk. ```