The Breakout Playbook

After recoveries from stock market corrections, with corrections defined as 10–20% declines in the S&P 500, doubledigit gains over the subsequent 12 months have been commonplace. In fact, stocks rose double digits in 70% of the 23 corrections studied back to 1950, with average and median gains of 16.2% and 14.6% respectively. The S&P 500 was only down one year later in two cases: during the dotcom bust in 2000 and the pandemic in 2020. In other words, it takes a lot to derail a bull market that has broken out to new highs.

Erasing Bear Market Losses Has Left More Upside Historically

Another way to measure potential upside for this bull market from here is to consider the April–May 2025 sell-off a bear market, which it was on an intraday trading basis, with a more than 20% decline, and calculate remaining upside after those bear market losses were recovered. This is what we did in the “Bull Markets Often Run Another Year or Two After Bear Market Recoveries” and “This Bull Market Likely Has More Left in the Tank” charts, with help from our friends at Evercore ISI. Based on this historical perspective, since recovering from the April–May tariff scare decline (so-called “Liberation Day”) in late June, this bull market may have 27 more months and another 51% of upside before it’s over. That may be optimistic given the losses earlier this year were not as severe as most bear markets, so perhaps the median historical gain of 30% over 16 months post-recovery is a more reasonable bull case scenario.