This has been an exceptionally strong summer for the U.S. stock market. The S&P is now up 5 months in a row, which makes forward returns very bullish (see study)
We can look at this from another angle. The S&P has increased >3% in July and >3% in August. This is rare. It has only happened 5 other times in history:
- August 2018 (current case)
- August 2009
- August 1994
- August 1987
- August 1970
- August 1951
As you can see, this only happens after bear markets, after “small corrections”, and before a “big correction” (1987 case).
Here’s what the S&P did next.
Click here to download the data in Excel
As you can see, the S&P’s forward returns were decent over the next year, with the exception of the 1987 case.
However, the 1987 case is unlikely to happen today. As those in the Membership Program know, the 1987 crash was very easy to predict. The circumstances that caused the 1987 crash do not exist today.
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