Huge months like November tend to be the start of a new bull move, not the end.
Here are all the >10% monthly moves for the S&P 500, with continued strength 6 and 12 months later quite likely. pic.twitter.com/WzvxMdBWXf
— Ryan Detrick, CMT (@RyanDetrick) December 2, 2020
Today’s Chart of the Day was shared by Ryan Detrick of LPL Financial Research (@RyanDetrick). The S&P 500 jumped 10.8% in November, marking one of its largest monthly gains in the past decade. So what typically happens after large monthly gains of this magnitude (>10%)? The following month has pretty much been a coin flip, with the index closing higher 50% of the time for a small median gain of 0.20%. Looking further out, gains start to get more likely and larger. Six months later, the index was higher 83% of the time for a median gain of 13%. Of course, this is just one data point to consider within the context of other evidence. But using history as a guide, we see that large monthly gains have led to further gains more often than not.