S&P 500's Rare Rebound Sparks Hope for 19% Gains Ahead
Geopolitical Relief Rally Is Over—Now Fundamentals Must Deliver
Deutsche Bank Update: The S&P 500 initially fell sharply amid the Middle East conflict before reversing course and ultimately surging past its historical median trend.
Market Technicals, Seasonality, and Sentiment
Year-to-Date Tops & Flops in the Indices
13 Straight Days of Gains • +9.8% in Just 10 Days A few days ago, the S&P 500 posted a 9.8% gain over ten trading days—an extreme outlier since 1950, placing it at the very edge of historical distributions. Since then, three more green days have followed. Pullbacks are entirely normal, and new all-time highs are no reason to sell!
There have been only 20 comparable cases in history, with an average 12-month return of around 19%. But in the past, such momentum signals typically emerged from clear correction or bear-market phases. This time, the surge came near all-time highs.
Three Consecutive Weeks of +3% Gains Each This has only happened twice before—once in 1982 and again post-Covid. In both cases, the S&P 500 was up more than 32% a year later.
From Oversold to Overbought in Just 11 Days—More a Bottom Signal Than a Warning The S&P 500 took only 11 days to swing from an RSI below 30 to above 70. The only faster turnaround was in 1982, when it took just six days. Historically, such extreme reversals have led to above-average returns—9.6% over six months and 16.3% over twelve—outperforming the broader market.
New Index High, but Few Stocks Hitting Fresh Peaks The S&P 500 marked another record high on Friday, yet the number of stocks at 52-week highs remains in the low double digits. Previous record runs usually saw far more individual stocks reaching new highs.
Only 35% of the S&P 500 Back Above Pre-War Levels Tech (64%), energy (63%), and financials (57%) are clearly driving the recovery, while staples (11%), healthcare (12%), and utilities (16%) lag far behind.
April Highs Often Signal Strength, Not an End When the first 15 days of April deliver at least a 5% gain, the S&P 500 has historically averaged a 31.9% return for the rest of the year. With a 7.6% gain already, this condition has been more than met.
The Magnificent Seven, Tech, and Software
Alphabet as a Venture Fund If Alphabet's stake in SpaceX—after dilution—stands at around 5% and the company's IPO truly values it at $2 trillion, that would imply a value of roughly $100 billion for Alphabet's holding.
Tech Is No Longer Software Plus the Rest—It's a Semiconductor Trade Now Three and a half years ago, software made up nearly half of the S&P 500's tech sector. Today, it accounts for just 25.4%. Semiconductors now dominate at 46.3%, with hardware at 28.4%.
The Nasdaq 100's forward P/E ratio sits below its 10-year average, meaning the reset has clearly come through valuations.
The S&P 500's forward P/E has returned to 20.9, just slightly above its five-year average of 20, after previously dipping close to the 10-year average of 19.
The Market Is Pricing in an Earnings Acceleration for 2026 Analyst estimates for the current quarter project roughly 12% year-over-year earnings growth in the S&P 500—the strongest start to an earnings season since 2021. Consensus forecasts then call for further acceleration to around 20% by the end of 2026.
Earnings Revisions Driven by… Since February 27, a staggering 51% of all 2026 EPS revisions in the S&P 500 have come from Micron alone. The top ten contributors account for 105% of the index's total revisions.
