The first half of 2019 was extraordinarily strong for US equities, and if you measure the returns from the close on Christmas Eve, the gains look even more gaudy.  But how gaudy were they really?  Keep in mind that prior to the 12/24 low, the S&P 500 had declined 19.8% (on a closing basis) from its high on 9/20, so when you look at the period from the start of Q4 2018 through the end of Q2 2019, the returns are a lot less spectacular.

We define a bear market as any move of 20% or more from a closing high to a closing low, so based on that definition, last year’s Q4 decline was close but not quite a bear market (the 20% threshold was reached on an intraday basis).  Surprisingly enough, there have been a number of instances in the last 50 years where the S&P 500 saw similar ‘near-bear’ markets with declines of 19%+ (but not 20%) which we have highlighted in the table and chart below.  We include how the S&P 500 performed in the months and years following those “near-bear” lows to see how the current rally stacks up and where it might go from here.

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