by Michael Tarsala
After six months of the S&P 500 going up at least 28% — like it did October to March — the folks at Birinyi Associates worked up a cool backtest on what happened next for the index the past 20 times the index saw a similar rally.
- Both the average and median returns were slightly up in the prior one-month, three months and six months.
- In 15 of 20 instances, the index was up again 3 months out, and in 13 of 20 instances going one month and six months out.
- That type of strong performance was nearly matched only once in the subsequent six months, in 1935.
- Only once were those gains completely wiped out in the subequent six months, in 1930.
- A nearly 10% drop in the six months following the 2010 rally was the second-worst in the study.
Source: Ticker Sense, Brinyi Associates Inc.