As of the close last Friday, there are only three trading days left for the first half of 2021. With the S&P 500 gaining almost 14%, many investors are asking what does that mean for the rest of the year? In fact. I’ve received a few calls from clients saying surely we can’t see even more gains since the market is up so much. Actually, as it turns out, history tells us that when there’s been a strong start to the year, that trend has continued for the rest of the year more often than reversing course.

According to Nasdaq Dorsey Wright, our main source for research, since 1928, the S&P 500 has generated a gain of 10% or more in the first half of the year 27 times. Of those 27 times, there have been only seven occasions (about 25% of the time) where the S&P 500 experienced a negative return in the second half.

Only once has the S&P 500 gained more than 10% during the first half of the year only to see a second half that pushed it into negative territory for the entire year. That year was 1929 when the S&P 500 was up 12.57% for the first six months and then saw a pullback of 21.74% over the next six months.

So, while it may provoke worries about a second-half “hangover,” the data shows that historically, a strong performance in the first half of the year has more often continued into the second half. See the chart below for more evidence.

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