SPX's 6-Month Run Could Mean More Upside for Stocks

The S&P 500 has added roughly 18% in the past six months

Senior Market Strategist
Feb 19, 2020 at 7:49 AM
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After an incredible 2019 whereby equities shook off the holiday blues of the year prior and the S&P 500 Index (SPX) gained nearly 30%, you’d be inclined to think that a consolidation of price action would be in the cards, right? Well, as it turned out, a continuation of the rally predicated on super-low interest rates and a healthy fear of missing out have driven equity gains to new records.

In today’s post I look back statistically at the last six months of trading and analyze the gains we have seen in historical context. I then peer into the top performers and worst performers over that time frame to see who is standing out from the crowd. Visually, the past six months of price action has been fantastic. As of the February 13 closing levels, the SPX had gained in excess of 18%.

SPX rolling returns

Only over the summer months of 2019 was this feat accomplished and prior to that you'd need to go back to 2016. Going back to 1990, I looked at all instances whereby the SPX had risen 18% in six months’ time. To reduce redundant signals, I only took one signal every 90 days. Compared to the at-any-time returns since 1990, strength as we have seen of late is not a harbinger of negative things to come; in fact, a continuation of upward bias is to be expected. In the past after strong six-month gains, the next six months, or 126 days, of trading average better than average returns vs. at any time.

SP study

One interesting note after a strong six-month period of SPX gains is that volatility tends to rise shortly thereafter. In the short-term, three to five days after this signal the Cboe Volatility Index (VIX) rises above average, although it declines further out in time.

VIX returns

Now let’s look at which equities have outperformed and underperformed over the past six months. Once again for reference the SPX is up 18% over this time frame. The top table is S&P winners over the past six months, the bottom table is comprised of underperformers.

SPX 6month winners

SP 6month losers


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