Over the last several weeks, there have been numerous comparisons made between today's market and 1938. As shown below, an overlay of the current S&P 500 over the period of 1936 - 1938 shows two similar patterns in both the decline from the peak and the advances off the lows. With that in mind, we looked to see how the S&P 500 would have to perform going forward in order to keep the relationship going.
As shown below, at its peak last week, the S&P 500 rallied 38.2% from the March lows. In 1938, the S&P gained 50.5% in the four months following its low. If the S&P 500 were to have a similar rally off of its lows today, it would top out at 1,018. While breaking 1,000 on the S&P 500 seems remarkable given where we were in March, it is still nearly 200 points lower than where the index was trading before the Lehman Brothers bankruptcy.
