Never bet against America: Historical signals point to a positive horizon for markets

Three of the Four Major U.S. Indexes Near Historic Highs — Recovery Stats Suggest Attractive Risk-Reward Ahead

Three of the four major U.S. stock indexes are just steps away from all-time highs, and the data surrounding this impressive recovery suggests an attractive risk-reward ratio going forward.

The S&P 500, Dow Jones, and Nasdaq are all nearing their record highs, with only the Russell 2000 lagging behind.

“We don’t often see such a rapid recovery across all three indexes,”
write analysts at SentimenTrader.
Their study of 15% market declines followed by a bounce back to just -5% shows five such signals since the 1970s. In all but one case, the S&P 500 was higher a year later — although short-term returns tended to be weaker.

“Even more impressive than the consistency of these moves is how limited the downside risk was in the six months that followed. The S&P 500 didn’t fall more than 4.4% at any point during those periods,”
the SentimenTrader team notes.