What the S&P's Fast Start to 2019 Could Mean for Stocks
This stock market signal sounded before Black Monday, too
by Rocky White
Published on Feb 27, 2019 at 7:30 AM
Updated on Feb 27, 2019 at 7:30 AM
Stocks have gotten off to a fast start this year. The last time the S&P 500 Index (SPX) was up this much before the end of February was 1987, which is otherwise known as the year of Black Monday. Do fast starts like this tend to be vulnerable to sharp pullbacks? This week, I’m looking back at other instances where stocks shot higher throughout the first two months of the year to find out how the market behaved going forward.
S&P Soars at Least 10% in Two Months
Going back to 1950, this is just the fifth time the S&P 500 was up double digits at the end of February (assuming we don’t pull back too much over the next couple of days). In the short term, there’s nothing to be afraid of based on the data below. Specifically, March was up at least 2% in each of the four previous instances. Six months later (at the end of August), the index remained higher every time.
The table below summarizes the returns above. For comparison, the table below that summarizes the data for all years since 1950. I already mentioned March being positive every time. The tables below show that after a strong start to the year, March averages a gain of just over 2.5%, which is more than twice the typical March returns since 1950.
continues at schaeffersresearch.com |
