— J.C. Parets (@allstarcharts) April 27, 2021
Today’s Chart of the Day was shared in a note by JC Parets (@allstarcharts). The chart shows the S&P 500 as it was recovering from four separate bear markets – 2008-2010 (top left), 2003-2004 (top right), 1982-1985 (bottom left), 1973-1978 (bottom right). JC points out that it’s very common to see the S&P 500 trade sideways in the second year of a bull market. As you can see, all four of these recoveries followed the same playbook. There was a strong initial thrust off the lows that persisted for about a year, followed by months of sideways price action. The good news is that the S&P 500 has still logged an average gain of 16.9% in year two of a bull market. But, it’s important to keep in mind that sideways price action would be perfectly normal at this point in a bull market cycle. For more on this, read the full note here.