For more than 17 months, the benchmark S&P 500 (SNPINDEX:^GSPC) has been unstoppable. Since bottoming out on March 23, 2020, the widely followed index has more than doubled in value. It marks the strongest bounce-back rally from a bear-market bottom in the index’s storied history.
But whether this rally can last is an entirely different story. If we look to history as a guide, it would suggest that there’s a growing chance of a double-digit percentage correction or crash on the horizon.
History may not be the market’s friend in the near term
For example, consider how the S&P 500 has behaved in each of the previous bounce-back rallies from bear market bottoms. In each of the eight previous bear markets (not counting the coronavirus crash), there were either one or two declines of at least 10% within the three years after finding a bottom. What this tells us is that rebounding from…