The stock rally last Friday may have signaled more than market relief over the apparent openness of Jerome Powell, the Federal Reserve chair, to interest rate cuts, Ryan Detrick suggested this week.
When Powell opened the door to a September rate cut, "the bulls stepped up in a historic way," said Detrick, the Carson Group chief market strategist.
The market move, though, was rare and possibly very bullish for performance over the next 12 months, Detrick said in a blog post Tuesday, explaining that over 90% of New York Stock Exchange equities were higher and more than 90% of NYSE volume was higher too.
This was a rare "90/90 day," the strategist wrote.
"Historically, we’ve seen this type of day near major lows, with the last two times coming off the near-bear market lows in April and off the COVID bear market low in 2020," he wrote.
Before the rally Friday, Detrick noted, the S&P 500 was down five straight days, with fairly minor losses.
The data show that 11 times out of 12, the S&P 500 was higher a year after a 90/90 day, gaining 23% on average, Detrick said.
"The shorter-term returns are much better than average as well. We’ve long said this is still a major bull market, and Friday’s action does little to change our tune," he added.
Detrick included a chart showing the past post-90/90 market gains since 1980. The three-month return was 11.5% on average and the six-month return was 16.3%.
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