S&P 500 Index: No Real End In Sight For The Rally

bullish buyMoney Morning Staff: Our friend and frequent Money Morning contributor Frank Holmes put together a chart of S&P 500 (NYSEARCA:SPY) gains that you have to see.

The index closed July with a monthly gain of 4.9%. This is the 14th month since 2009 that the S&P 500 has gained at least 4%.

Holmes, CEO of U.S. Global Investors, went back and reviewed the other 13 months with +4% gains.

He recorded the S&P’s performance in the following one-month and three-month period after the month that it gained more than 4%.

His chart tells an interesting story…

Holmes found that what followed was an 84.6% probability of returns, with averages running 2.3% on the one-month and 5.4% on the three month.

Almost all of the three-month gains are north of 3%. In fact, only twice does the three-month performance show any reversal at all.

Take a look…

S&P 500 Positive in July. What Does History Show Us?

Dates: S&P 500
+4% Or More In 1 Month

1 Month Change

What Happened In Following Month

What Happened In Following 3 Months

July 2013

4.9%

January 2013

5.0%

1.1%

6.6%

February 2012

4.1%

3.1%

-4.1%

January 2012

4.4%

4.1%

6.5%

October 2011

10.8%

-0.5%

4.7%

December 2010

6.5%

2.3%

5.4%

September 2010

8.8%

3.7%

10.2%

July 2010

6.9%

-4.7%

7.4%

March 2010

5.9%

1.5%

-11.9%

November 2009

5.7%

1.8%

0.8%

July 2009

7.4%

3.4%

4.9%

May 2009

5.3%

0.0%

11.0%

April 2009

9.4%

5.3%

13.1%

March 2009

8.5%

9.4%

15.2%

Post-2008 Probability of Positive Returns

84.6%

84.6%

Post-2008 Average

2.3%

5.4%

1928-to-date Probability of Positive Returns

65.1%

64.7%

1928-to-date Average

0.9%

2.0%

Source: Bloomberg

Source: Frank Holmes’ “Frank Talk”

Holmes’ data suggests that there’s no real end in sight for the S&P 500 rally.

This is why Money Morning Capital Wave Strategist Shah Gilani – who has been called “The Reluctant Bull” – is all about riding this rally out.

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