It was a banner October for the U.S. market…

The S&P 500 jumped 6.9%, its best October performance since 2015. The index also finished out the month with new all-time highs.

Clearly, the bull market is in full force. And history shows the gains can continue…

That’s because October’s gain was a historic move. Since 1950, only six Octobers have shown more growth. And those six instances led to even more gains in the market.

More than that, a massive one-month gain isn’t a sign of the top. History shows that it generally means more upside is ahead. In this case, we could see 17% gains over the next year.

Let me explain…

Historically, October is the best month to own stocks. Since 1950, that month has yielded an average of 1.62% gains. That’s two and half times better than the typical month. And only March comes close, with an average gain of 1.55%.

So it might not be surprising that last month was a big winner. Still, a 6.9% gain made it an October for the history books. Again, only six other Octobers have seen similar returns.

That return also followed the worst month for stocks so far this year. The S&P 500 fell 4.8% in September, but quickly catapulted to new all-time highs. Take a look…

So what happens to stocks after a move like this – not just an October rally, but any huge breakout month?

It’s pretty simple… The trend tends to stay in place. Take a look…

Buying after similar big monthly rallies has led to 3.6% gains in three months, 7.5% gains in six months, and 12.7% gains over the following year.

That’s already an improvement over a typical buy-and-hold strategy. For roughly 70 years, the S&P 500 has returned about 8.1% annually. But we can do even better…

As you can see, if we narrow our scope to include only breakout Octobers, the outlook is even more bullish. Take a look…

Those six instances led to 3.7% gains in three months, 12.5% gains in six months, and 16.5% gains over the next year.

That means stocks are primed to double their long-term return within 12 months… all thanks to October’s incredible rally.

Of course, that comes from a small sample size… Again, setups like these have only happened six times in the past seven decades. But either way, record-breaking monthly gains in the S&P 500 bode well for the next year.

It might seem foolish to bet on higher prices after a record month. But history shows us it’s exactly what you should do. And it’s one more reason you want to be long stocks now.

Good investing,

— Brett Eversole

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Source: Daily Wealth