Chart of the Day - Wednesday, May 20th, 2020

Today’s Chart of the Day was shared on Twitter by Strategas Research (@StrategasRP). The S&P 500 is up about 30% in the past 40-days, which is one of the best 40-day performances in recent history. Many argue stocks have gone too far too fast, while others believe the momentum from this sharp rally can push us higher. The table shows the S&P 500 forward returns over the next 20, 65, 125, and 250-days following the best 40-day % gains. On average, both the short-term and long-term returns have been positive, with an average gain of 16.3% over the next 250-days. As Strategas points out, several of these dates coincide with major lows in the S&P 500. 2001 was a clear outlier with the index falling 20.6% over the next 250-days. However, overall returns following some of the best 40-day gains have been pretty strong. Using history as a guide, it's hard to argue that stocks have gone too far too fast.