"History suggests that rallies of this kind are unsustainable and do not signal the all clear," Bowler said in a recent note.
First, he looked into all the non-overlapping rallies of 10% or more that occurred over three days. There have been 26 of these in the history of the S&P 500. Only six did not feature subsequent declines that took the index below its starting point of the 10% rally. The second element he highlighted was the size of this peak-to-trough drawdown in stocks relative to the duration of the sell-off. He found that during every recession since 1929, stocks tended to sink further away from record highs the longer the drawdown lasted.
Thirdly, Bowler found that the size of S&P 500 drawdowns is closely linked to the length of recessions. This link exists because investors typically struggle to go all-in on stocks for as long as the economic picture is cloudy.
A no brainer