Hold Your Horses

As I type, just over an hour into today's session, the S&P 500 is up 2.27%, coming off of an initial 4%+ rally.

The question you may be asking is, was yesterday it? Was that the great capitulation that tends to characterize the end of a correction or bear market? Or, phrased another way, does today's rally spell the resumption of the bull market; next stop new all-time highs?

Well if today's rally gathers enough steam to place it in the top-20 best day list since 1950, well, while anything's possible, per the below, you may still want to hold your horses.

Here, courtesy of Schwab, is that top-20 list:

Click to enlarge...


Note that all but 5 of those days occurred amid ongoing bear markets. Three occurred at the bottom of double digit corrections (-10% to -20%) and only two at the bottom of bear markets.

Here's a look at the S&P 500 from each of those huge 1-day rallies to either the bottom of the existing trend, or -- in cases where the rally stuck -- the peak before the next double-digit down move.

Click each graph to enlarge...

From the 10/13/2008 rally (-32% from there):


From the 10/28/2008 rally (-28.07% from there):


From the 10/21/1987 rally (-13.34% from there):


From the 3/23/2009 rally (+47.92% from there):


From the 11/13/2008 rally (-25.76% from there):


From the 11/24/2008 rally (-20.58% from there):


From the 3/10/2009 rally (+69.16% from there):


From the 11/21/2008 rally (-15.44% from there):


From the 7/24/2002 rally (-7.90% from there):


From the 9/30/2008 rally (-42.00% from there):


From the 7/29/2002 rally (-13.59% from there):


From the 10/20/1987 rally (-5.45% from there):


From the 12/16/2008 rally (-25.91% from there):


From the 10/28/1997 rally (+28.74% from there):


From the 9/8/1998 rally (-6.26% from there):


From the 5/27/1970 rally (+43.45% from there):


From the 1/03/2001 rally (-42.36% from there):


From the 10/26/2018 rally (+19.37% from there):


From the 10/29/1987 rally (-8.52% from there):


From the 10/20/2008 rally (-31.34% from there):


By the way, clients, you should know that the history of huge one-day moves has zero impact on our process. And you should expect more days like today (assuming the rally holds till the close), as well as their opposites in the coming weeks...