The S&P 500 fell 20 per cent in the first quarter, one of the worst quarterly performances in history. It rose by the same amount in the second quarter, one of the best quarterly performances in history. So what might be in store for stocks in the coming months? History suggests good times lie ahead.

The S&P 500 has enjoyed quarterly gains of at least 15 per cent on only eight occasions since the second World War, notes Ryan Detrick of LPL Research. The next quarter was higher every single time, with stocks posting average gains of 9.5 per cent.

The fact stocks rose every month in the second quarter also augurs well, says Detrick. This has happened 15 times in the past, with stocks gaining on 13 occasions over the following quarter.

Over the remainder of the year, equities rose on all but one occasion, averaging gains of 10.6 per cent. History is an imperfect guide, of course, but the stats show why momentum strategies can be so powerful. “Although it might not seem likely, given the headlines and magnitude of the current bounce, it is important to be aware that extreme strength usually begets more strength,”says Detrick .