SPX 'Streaks' Into the Spring

SPX Forward Returns are Robust When a Streak of 5 Advancing Months Extends Into the Spring

In the financial world, patterns can sometimes give us a glimpse into future possibilities. The "SPX Streaks into the Spring" study below captures one such intriguing pattern within the stock market. It maps out the trajectory of the S&P 500 Index, dating back to before 1927 (using Dow data pre. 1927), with a keen focus on particular years that witnessed a continuous rise from November through March. When the winter chill gives way to the first breaths of spring, if the S&P 500 has been on an unbroken winning streak through these months, history has shown an encouraging trend for the months to follow. It's as if the market, like nature, blooms in response to the changing seasons. Let's delve into the specifics that stand out in this pattern. After such a warm financial winter, the average 1-year forward return has been a robust 15.01% up, which notably outpaces the general average of 7% up seen over all periods. This isn't a fleeting spring blossom either; the growth appears to last well beyond the thawing of March. By the time the leaves begin to turn once more, marking the end of the year, there's an average increase of 12% up, nearly double the all-period average of 6% up. It's as though the market's spring energy propels it forward for the rest of the year. But how reliable is this springtime financial flourish? The data speaks volumes, with 13 out of 14 events following this trend resulting in an upswing for the remainder of the year. In essence, the pattern is clear and historically grounded: when the SPX joyfully leaps into spring with five consecutive months of gains, the market tends to ride this wave of optimism, resulting in notable growth for investors by year's end and even into the next year. For market watchers, this could be seen as a hopeful sign, a harbinger of sustained growth, as if the market itself is shaking off the cold and looking forward to sunnier days.