The Magnitude Of The Rally

By Seeking Alpha

Since the recent market low close on Christmas Eve, the S&P 500 (SPY) has rallied more than 550 points, a scintillating +23.6% price return. That strong rally occurred over just under four months in 76 trading sessions. I wanted to put the speed and ferocity of this rally into historical context. How often have market gains of this size occurred in periods this short? In what market environments did they occur? Are there any insights to be gleaned for what we might expect from here? Let's break these questions down.

Question 1: How often have market gains of this size occurred in periods this short?

Answer: Not very often. Since the S&P 500 went to its current five hundred constituent form in 1957, there have been 6 years that featured a market gain this strong and this rapid - 1975, 1997-1999, 2009, and the most recent period. Going back further in history and including the S&P 500's predecessor indices, there were a number of market gains this large during the highly volatile 1930s. While the Depression-era volatility led to large market swings, there was not a market gain this large over this short of a time period for 32 years between 1943 and 1975. This is a historically significant move. Below, I have depicted rolling 76-day returns in graphical form. The orange line is the magnitude of the current market rally to contrast with historical periods.

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