V-Bottom Fireworks: The Rally Most Everyone Missed (And What’s Next)
The investment team at OHFG has been discussing the likely V-bottom in stocks since mid to late April while many others including numerous retired hedge fund billionaires taunting low-lows, crashes, or retests. We discussed for weeks in our videos, looking back April 7th “was what we thought was “The Low” for the overall S&P500 index and USA stocks most likely for the rest of 2025, ex the unforecastable Black swan event. The -20% bear market correction was largely event induced by the President’s unforeseen tariff policies.
Ex the GFC in 2007-08 and the popping of the speculative Dot.com bubble frenzy in 2000-01, which did proceed longer and deep recessions. History said enough damage had been done and we would V-bottom in a similar fashion as the V-bottoms in the last 20 to 30 years. And investors, the really good news here? This V-bottom happened WITHOUT Federal Reserve intervention and interest rate cutting. More Fed cuts are in front of us. Think of that investor, we are at marginal new ATH’s in stocks, and the Fed is paused.
The Zweig Breadth thrust on April 24th, created the first of what many chartists call a bullish “Island Reversal” pattern. I read at least 10 articles pooh-poohing this data set at that time. This is why one of our follow-on video titles was “V-bottoms, no one gets in”.
One can rationalize why markets have V-bottomed since early April on walking back of tariff extremism, better jobs, and wage inflation data, but viewers who know me know I like real time market data. The bond market data since early April was saying real growth was “ok” and inflation peaked early in April, not the stagflationary doom biased call many have suggested.
For months we’ve discussed how the charts and the economy look very similar to the period that was mid Dot/com not peak Dot.com. The period into the October 1998 bear market selloff caused by the event of the hedge fund LTCM blowing up. I haven’t been able to find many who believes this analogy or will spend any time researching it. I’ll up date of few of the chart overlays like the SP500, the SOX index and a couple others later in this video, but look at this data set before you dismiss my thoughts.
According to Lyler Lovingood at Potmoc Research, on average, it has taken 512 trading days for stocks to reach a new all-time high following a -20% decline when suing closing process.
That’s his dataset. Look closer. It took us only 57 days to regain new ATH during this v-bottom. The next shortest time frame? Yes, late 3rd quarter early 4th quarter 1998, mod Dotcom infrastructure buildout. Back then it took 59 days, only 2 more days. No other V-bottom comes close. Not the Covid induced government stimulus windfall in 2020. Not the earnings recession bear market in 2022.
Here’s an update of the SP500 overlay then and now.
The pattern remains bullish and yes, historically July is one of the better return months for the S&P500 with earnings and buybacks around the corner. Up and to the right is good. New ATH’s are not bearish historically. That said, after rallying for almost 3 months off the April lows, do not expect the pace and percentage gains of stocks to continue at this rate. Expect the pace to slow. What groups might slow? Well technology names that have led the rally USUALLY slowed their gains in the 3rd quarter. I would expect the same this year with Semi’s likely stalling and maybe software and healthcare taking up the lead.
Here’s the overlay of the SOX semi index in 1998 and now.
We called for a semi rally while many others were hunkered down in April and May and called for lower stocks or risk off. We got our rally. We don’t expect a broad semi selloff in 2q but do expect 2-4 months of sideways consolidation after 2q EPS are reported in August. This should be the AI pause that refreshes. We got this same dynamic playing out in 1998/99. Maybe the next stage higher on semis requires a china/us trade agreement or maybe its just time to digest inventory. But history says we are likely only about 1/3rd down with an 18–24-month semi rally.
Investors we expect a normal late summer pull back in the markets, but Investors you most likely won’t see those low levels of April again for quite some time if at all this year. Many institutions got too bearish near the early April lows and “de-risked” and are already way behind the performance curve in the 2nd quarter. If this plays out as Our team has stuck with our 2025-yearend target of 6600 even as stocks sold off into April, and most strategists slashed their targets from over this number to the low 5000’s and are now raising them once again.
Does that mean you shouldn’t add to stocks particularly if you are younger and in saving and accumulation mode? No, rarely can you pick the absolute level in both price and time, on both the buy side, sell side, and buy side once again, particularly in growth stocks and as we covered in prior videos. New ATHs are NOT bearish!
Regardless of the path for the economy and financial markets in the next few months, the investment team at OHFG will be here manning the ship and adjusting our models and long/short, hedged equity fund where we can.
Until next week, have a blessed weekend, and great and safe 4th of July, and know that the OHFG team is doing what we can to plan for you and your family’s future regardless of what stage you are at in your career or retirement.
Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free consultation: https://click2retire.com/Connect
Chris Perras
CFA®, CLU®, ChFC®
Chief Investment Officer, Financial Advisor
Chris is a seasoned investment professional with over 25 years of experience working with some of the most successful money management firms in the world. Chris has made it a point in his career to adapt as the market landscape changes, seeking to utilize the appropriate investment strategy for a given market environment. His transition from managing billions of dollars at the institutional level to helping individuals and families retire is guided by a desire to see first-hand the impact he is making in the lives of clients at Oak Harvest.
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