Something extraordinary happened on Friday.
On Thursday, the S&P 500 hit an intraday all-time high. By Friday’s close, it had dropped 2.7%.
This kind of sharp selloff immediately following a record high is rare.
Since 1950, there have only been 11 occasions where the S&P 500 hit an all-time high and then fell 2% or more the next trading day. Friday’s decline ranks among the five largest of those instances.
Sounds alarming? Not so fast.
Looking at the previous 10 occurrences, the forward return profile has historically been very strong:
- 1 Month: Positive 60% of the time
- 3 Months: Positive 80% of the time
- 6 Months: Positive 100% of the time
- 12 Months: Positive 90% of the time
In other words, while the initial move may feel unsettling, history shows that these sharp post-high drops have often been followed by meaningful gains over the following 6–12 months.
Will this time be different? Perhaps. But until the market shows it can’t sustain this grind higher, this looks more like a violent shakeout than a lasting trend change — and potentially, an opportunity to buy the dip.
