Our friend and frequent Money Morningcontributor Frank Holmes put together a chart of S&P 500 gains that you have to see.
The index closed July with a monthly gain of 4.9%. This is the 14th month since 2009 that the S&P 500 has gained at least 4%.
Holmes, CEO of U.S. Global Investors, went back and reviewed the other 13 months with +4% gains.
He recorded the S&P's performance in the following one-month and three-month period after the month that it gained more than 4%.
His chart tells an interesting story...
Holmes found that what followed was an 84.6% probability of returns, with averages running 2.3% on the one-month and 5.4% on the three month.
Almost all of the three-month gains are north of 3%. In fact, only twice does the three-month performance show any reversal at all.
Take a look...
S&P 500 Positive in July. What Does History Show Us?
|
Dates: S&P 500 +4% Or More In 1 Month |
1 Month Change |
What Happened In Following Month |
What Happened In Following 3 Months |
|
July 2013 |
4.9% |
-- |
-- |
|
January 2013 |
5.0% |
1.1% |
6.6% |
|
February 2012 |
4.1% |
3.1% |
-4.1% |
|
January 2012 |
4.4% |
4.1% |
6.5% |
|
October 2011 |
10.8% |
-0.5% |
4.7% |
|
December 2010 |
6.5% |
2.3% |
5.4% |
|
September 2010 |
8.8% |
3.7% |
10.2% |
|
July 2010 |
6.9% |
-4.7% |
7.4% |
|
March 2010 |
5.9% |
1.5% |
-11.9% |
|
November 2009 |
5.7% |
1.8% |
0.8% |
|
July 2009 |
7.4% |
3.4% |
4.9% |
|
May 2009 |
5.3% |
0.0% |
11.0% |
|
April 2009 |
9.4% |
5.3% |
13.1% |
|
March 2009 |
8.5% |
9.4% |
15.2% |
|
Post-2008 Probability of Positive Returns |
|
84.6% |
84.6% |
|
Post-2008 Average |
|
2.3% |
5.4% |
|
1928-to-date Probability of Positive Returns |
|
65.1% |
64.7% |
|
1928-to-date Average |
|
0.9% |
2.0% |
|
Source: Bloomberg |
|||
Source: Frank Holmes' "Frank Talk"
Holmes' data suggests that there's no real end in sight for the S&P 500 rally.
This is why Money Morning Capital Wave Strategist Shah Gilani - who has been called "The Reluctant Bull" - is all about riding this rally out.
"You have to be in it to win it," Gilani said Friday. "You can't afford to be on the sidelines. [The U.S.] is the place to be in terms of growth. We are the place to be in terms of a safe haven for money. We are also the place to be because our stock market is the most liquid in the world."
As Gilani pointed out, there's just no substitute for stocks right now as the Great Rotation continues more or less unabated, and it's continuing to make a lot of people a lot of money.
For investors, this means to make sure you are in the best possible position to capitalize on this rally - put your stops in place, and enjoy the ride.