After my research on post-crash behavior was complete, I turned to stock market performance. With both August and September closing lower, I wondered if there was any trend for Q4. Over the past 35 years, there were only 6 occurrences and all led to a positive Q4 by an average of +10.86%! You can view the study here.
http://investfortomorrowblog.com/archives/1936
With the help of my friend and colleague Dana Lyons, http://jlfmi.tumblr.com, I analyzed stock market returns since 1950 when the S&P 500 dropped at least 10% in 6 days, like we saw in August. The average results are below.
3 months later +5.6%
68% of the time returns positive
6 months later +12.5%
81% of the time returns positive
12 months later +21.4%
81% of the time returns positive
24 months later +37.5%
90% of the time returns positive
Three independent studies all conclude the same thing over the intermediate-term. The bull market and this rally are far from over and my longstanding target of at least 20,000 is achievable in 2016.
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