Market Insights: How has the S&P 500 performed in the past after a flat year?

How has the S&P 500 performed in the past after a flat year?

We recently came across a very interesting statistic that we wanted to share as we move closer to the end of this year.  We have observed that the U.S. stock market, as represented by the S&P500, has barely moved from where it started the year.  As of today, the S&P500 is down approximately 0.6% on a total return basis.  

How have equity markets performed in the past when such an event occurs?  Interestingly enough, the S&P 500 has only returned between -3% and +3% on a calendar year basis seven times since 1960.  This is a fairly small sample size as this year would mark only the eighth instance of similar returns, unless the markets experience a big move between now and the New Year.  In these past seven instances, here is how the S&P 500 market performed the following year:  +13%, +34%, +12%, +26%, +12%, +11%, and +23.  This is an average return of 18.7%.  With a U.S. recession currently nowhere in sight  according to our measures (the highest probability we have seen from numerous models as of last week was 15%), this could potentially bode well for 2016.