At the beginning of August, everyone was talking about a “waterfall”—a large, rapid decline in the stock market—after the Standard & Poor’s 500-stock index fell 16.7% in just 12 days.
But what’s the opposite of a waterfall? Because, folks, that’s what we have on our hands right now after the S&P 500 gained 16.9% during just 18 days.
Birinyi Associates dubbed these moves “surges”—personally, we prefer geysers—and found six examples of 14% moves that occurred in just 15 trading days since 1962. While the average returns during the following one and three months were nothing to get excited about it—an average of 0.6% and 1.2%, respectively—the six-month returns were impressive: The market was higher in all six cases, and the average gain was 14.9%, with a range of 6.6% to 25.1%.
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