The market has done an incredible job last month to bounce back so strongly that it almost seems certain that we have seen the bottom of this bear market and we are going to see a bullish trend moving forward. Below is a bullish case based on the stats that support this idea.
If you ask me, I also believe we will see good days a year from now. But, this is a big but, I'm very skeptical about the near future. I even believe there is still a good chance we may even see a test to the Jun low before we are finally done with the bear market. In the past week or so, I'm accumulating short positions to bet we will see a turnaround pretty soon to the downside. I think the good days for now are nearly over, if not yet!
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Last month, the S&P 500 and the Nasdaq climbed 9.1% and 12.3%, respectively. Huge one-month gains like these are uncommon.
And according to Chartered Market Technician ("CMT") Ryan Detrick – from the Carson Group – there's a good chance that July's rally could be the start of a bigger move higher.
Since 1945, the S&P 500 has climbed more than 9% in a month just 17 other times. That's only about 2% of all months over that span.
Over the next three months, six months, and 12 months, the index was up 3.5%, 10%, and 15.4%, respectively. Those are solid gains.
The six-month gains roughly match the average annual gain of the stock market (about 10.7%). And the one-year returns are about 40% higher than the long-term average return for stocks.
You can see a summary of Detrick's recent study in the table below...
It's also important to note that after a signal, the S&P 500 was higher a year later 82% of the time.
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