Chart Of the Day

Wednesday, the S&P 500 closed at a new (2002-2005) rally high of 1,245.04. So how does this rally rate? Today?s chart illustrates the average percent change in the S&P 500 during the first 1000 trading days following a major stock market correction (15% or more). The chart illustrates that the market tends to achieve the majority of its gains during the first two years (504 trading days). The reasons for the reduced gains as rallies age are two-fold. First, longer rallies have not tended to result in proportionally larger gains. Second, most rallies have not lasted 1000 trading days. Therefore, more significant corrections are included in the gray average line as it approaches 1000 trading days. In the end, when compared to stock market rallies since 1950, the current rally has been extremely average.