How the S&P 500 Typically Performs After a 7-Week Surge of Over 18%

Sharp rallies in the S&P 500 often attract investor attention, especially when they occur over short periods. One of the rare but noteworthy patterns is when the index gains more than 18% over just 35 trading days — approximately 7 weeks. As of May 29, 2025, this threshold has been crossed once again, prompting the question: what usually happens next? Does the rally continue, or is a short-term correction more likely?

Historical Perspective: Data from 1957 to Present

According to research by SubuTrade, since 1957, there have only been 8 instances where the S&P 500 jumped more than 18% in a 35-day span. Each occurrence marked a critical turning point — sometimes the beginning of a prolonged bull market, and at other times a setup for short-term profit-taking.

On average, following such rallies, the index tends to keep climbing. One month later, the average return is 4.27%. After three months, the average gain rises to 7.55%, and after six months, it reaches 13.29%. Looking out one full year, the S&P 500 has historically delivered an impressive 27.73% return after such sharp moves.

Long-Term Momentum Requires Patience

A key insight from this data is the high rate of longer-term success. While only 43% of cases showed positive performance one week later, 100% of the instances saw gains after six months and one year. These statistics are remarkably consistent in a market known for volatility and unpredictability.

One standout example is from May 2020, during the height of the COVID-19 crisis. The index surged by over 18% in just 35 trading days. One year later, the S&P 500 had posted a remarkable 45.29% return — one of the strongest one-year gains following such a rally.

Not All Outcomes Are Bullish in the Short Term

Despite the strong long-term averages, it’s important to note that not all short-term outcomes are positive. After the rally in November 2002, for instance, the S&P 500 dropped by 7.97% over the next two months and ended down 10.25% within three months. A similar dip occurred in March 1991, with the index falling 2.69% within just two weeks.

This underlines a critical point: while the long-term trend following strong rallies is typically upward, short-term volatility and corrections remain a real risk. Investors who chase momentum immediately after such moves may experience temporary drawdowns before longer-term gains materialize.

Will 2025 Follow the Same Pattern?

As of late May 2025, the S&P 500 has gained more than 18% in a 35-day stretch — placing this year alongside previous historic moves. Based on past data, it would not be surprising to see the rally extend over the coming months. However, it’s crucial to acknowledge that the macroeconomic backdrop today — including interest rate policies, inflation dynamics, and geopolitical tensions — differs significantly from previous decades.

For forward-looking investors, the historical message is clear: entering the market after a sharp rally like this has typically paid off. Notably, in none of the prior cases did the index post a negative return over the following year.

Key Takeaway: Strategy After a Strong Run

The historical evidence strongly supports a patient, medium-to-long-term investment approach following such rallies. While short-term pullbacks are common, holding positions for six to twelve months has proven effective across all past occurrences.

In summary, after a +18% gain over a short period, the S&P 500 usually continues to move higher. Investors should still account for macro conditions, but the historical data offers a bullish reference point — especially when 45.29% one-year gains like in 2020 are part of the precedent.