The ASX 200 just had its longest winning streak since 2017. What’s doing?

January’s sell-off is a distant memory now, as Australian stocks come charging back.

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Believe it or not, the S&P/ASX 200 Index (ASX: XJO) just enjoyed its longest winning period in five years.

According to Saxo Markets Australian market strategist Jessica Amir, on Thursday afternoon the index charged upwards for eight consecutive days.

“This is the longest win streak since 2017,” she said.

“The materials sector is up the most, up 2%, while tech stocks are down 1.4%.”

The bullish turn is happening all while the war in Ukraine tragically continues and fears of interest rates have turned into actual higher rates.

Remember the panic selling in January? 

That seems like two years ago now, not two months.

It’s an important lesson for long-term investors that the market can do anything in the short term but will eventually trend upwards.

Resources leading the charge for ASX 200

According to Amir, the current hot streak has been triggered by a few different factors.

“It’s end of quarter, so professional investors are taking profits [off] the table, rebalancing portfolios,” she said.

“Secondly, the iron miners are charging — like Champion Iron Ltd (ASX: CIA) which we’ve mentioned many times now, including yesterday, it’s one of today’s best performers, up 4.5%. Followed by the iron ore heavy weights: Fortescue Metals Group Limited (ASX: FMG), BHP Group Ltd (ASX: BHP), and Rio Tinto Limited (ASX: RIO) after the iron ore price (SCOA) rose 4.5% in two days on optimism Chinese demand will pick up.”

Another driver is US president Joe Biden announcing this week a production boost for “critical minerals”.

This has triggered a price surge for lithium-related ASX shares.

“This has fuelled US battery tech company… Novonix Ltd (ASX: NVX) [to head] up 6%, and ASX 200 African lithium company AVZ Minerals Ltd (ASX: AVZ) up 4%.

‘Dangerous game for equity investors’

During the current part of the market cycle, Amir recommends investors take shelter in sectors like logistics, cybersecurity, commodities, defence, and activities related to “green transformation” such as hydrogen production.

“​​Our head of equity strategy says that without commodity exposure, it’s a dangerous game for equity investors in 2022.”

Amir noted that lithium producers have been the best performers on the ASX so far in 2022, citing the 61% gain for AVZ and 88% for Lake Resources NL (ASX: LKE).

But mining stocks are notoriously fickle. So if investors were nervous about picking individual companies, but still wanted to back the rise of the battery and electric vehicle industries, she had a suggestion.

“You could invest or trade in Global X Lithium & Battery Tech ETF (NYSEARCA: LIT) or ETFS Battery Tech & Lithium ETF (ASX: ACDC) that invests in about 30 of the biggest EV and battery technology companies in the world.”

The ASX 200 ended its winning streak after market close on Thursday. It ended 0.2% down after post-trade processing.

Motley Fool contributor Tony Yoo owns ETFS Battery Tech & Lithium ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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