Analyst Sees Historically Strong 18-Month Window Ahead for U.S. Stocks
As the latest AI-driven bull market approaches its fourth birthday, some investors are beginning to worry that its gains may be running out of steam. But Jay Kaeppel, a technical strategist at SentimenTrader, believes history suggests an 18-month period of strong stock-market performance is only just beginning. Kaeppel has identified a seven-year cycle in which the next “favorable” period will begin on October 30, 2026. In comments sent to clients, he explained that, based on the past 106 years of history, periods of this type have often produced unusually strong returns for stocks. Past performance is no guarantee of future results, and Kaeppel himself acknowledges that he has difficulty explaining why the seven-year cycle has worked so consistently. Still, market researchers have identified numerous calendar-based anomalies beyond the one Kaeppel highlights. In investing, simply following patterns that have historically worked can sometimes prove highly rewarding. “More than 100 years of history show that the odds of a bull market increase after October 30 of this year,” Kaeppel wrote. Kaeppel’s research found that U.S. stocks have followed a remarkably consistent seven-year cycle over the past 106 years. Each seven-year cycle can be divided into two three-and-a-half-year cycles, which can then be further divided into an 18-month “favorable” period and an 18-month “unfavorable” period. Kaeppel explained that although stocks have generally risen over time in all periods, returns during the unfavorable periods have been much more volatile and less consistent. As shown in the source table, the favorable periods produced substantially higher average win rates and returns. Even so, stocks have continued to perform strongly despite the current phase of the cycle being labeled “unfavorable.” FactSet data shows that the S&P 500 has gained more than 26% since the current 18-month period began on February 13, 2025.
But Jay Kaeppel, a technical strategist at SentimenTrader, believes history suggests an 18-month period of strong stock-market performance is only just beginning. Kaeppel has identified a seven-year cycle in which the next “favorable” period will begin on October 30, 2026. In comments sent to clients, he explained that, based on the past 106 years of history, periods of this type have often produced unusually strong returns for stocks.
Past performance is no guarantee of future results, and Kaeppel himself acknowledges that he has difficulty explaining why the seven-year cycle has worked so consistently. Still, market researchers have identified numerous calendar-based anomalies beyond the one Kaeppel highlights. In investing, simply following patterns that have historically worked can sometimes prove highly rewarding.
“More than 100 years of history show that the odds of a bull market increase after October 30 of this year,” Kaeppel wrote.
Kaeppel’s research found that U.S. stocks have followed a remarkably consistent seven-year cycle over the past 106 years. Each seven-year cycle can be divided into two three-and-a-half-year cycles, which can then be further divided into an 18-month “favorable” period and an 18-month “unfavorable” period.
Kaeppel explained that although stocks have generally risen over time in all periods, returns during the unfavorable periods have been much more volatile and less consistent. As shown in the source table, the favorable periods produced substantially higher average win rates and returns.
Even so, stocks have continued to perform strongly despite the current phase of the cycle being labeled “unfavorable.” FactSet data shows that the S&P 500 has gained more than 26% since the current 18-month period began on February 13, 2025.