Saturday, June 28, 2025

What the S&P Historically Did After Similar V-Shaped Rallies | SubuTrade

@SubuTrade highlights a rare V-shaped recovery in the S&P 500, surging 18% from a low on April 7, 2025 to a new high by June 27, 2025, a pattern historically linked to strong gains, with data from 11 past instances showing an average 1-month gain of 2.0% and a 3-month gain of 6.9%, though outcomes vary widely (e.g., -8.1% to +17.7%).

S&P 500 after it rallies 18% to a 1 year high within 3 months (1927-present).

This rebound aligns with unexpected US-China trade talks resuming in May 2025, reducing tariffs from 145% to 30% and lifting export restrictions on rare earth minerals, a move that boosted market confidence despite initial fears of a recession, as reported by Reuters on June 27, 2025.

Historical analysis of similar recoveries suggests caution, as a 2020 study in the Journal of Financial Economics found V-shaped rallies often precede volatility, with a 30% chance of a correction within 6 months, challenging the bullish optimism.

 

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