The S&P 500 has not seen such a strong rally since 1997. Now what?

The S&P 500 continued to breach record territory Monday, en route to end August with its best performance in the first eight months of a calendar year since 1997.

History offers no guarantees, analysts said, but shows strong performance tends to continue.

The large cap benchmark SPX,
+0.43%
rose 0.5% on Monday to hit the 53rd record set in 2021 and boost year-to-date profits to 20.6%. With one trading day left in the month, that would be enough for the strongest year-to-August performance since rising 21.4% over the same period in 1997.

The Nasdaq Composite COMP,
+0.90%
also closed on a record Monday, up 0.9%, as the Dow Jones Industrial Average DJIA,
-0.16%
lagged with a drop of 0.2% or 55.96 points.

According to Jefferies, the S&P 500 has seen an average gain of 6.07% through August 31 since 1971.

Earlier: What the S&P 500, which will hit 50 record highs in 2021, says to stock historians?

While this year’s rally may seem impressive, according to Dow Jones Market Data, it is only the sixth strongest performance in that period in the past five decades.

In a note, Ryan Detrick, chief market strategist at LPL Financial, pointed to the chart below, which dates back to 1954. It shows that the last five times the S&P 500 rose more than 15% through the end of August, stocks showed a positive performance over the remaining four months of the year four times.

LPL Financial

“In fact, the average return in the last four months after a great start to the year is 4.2%, with a very impressive median return of 5.2%. Both numbers are above average, and the median all-year return over the last four months is 3.6%, Detrick said.

Jefferies analysts noted that since 1971, the years when stocks were up more than 10% through the end of August showed positive performance 83% of the time in the last four months, versus 72% of the time for all years.

The year’s performance so far isn’t the only demonstration of how strong the index was in 2021. Detrick noted that before this year alone, 1964 and 1995 saw more than 50 new highs before August was over. The record for new highs in one year is 77, set in 1995, and this year is on track to get very close to that record, he said.

“One of the most common bear concerns is that stocks are going up a lot, meaning stocks are going to fall a lot,” Detrick wrote. “That’s just not true, thankfully.”

The tell: Investors are comparing the 2021 stock market rally to the pre-crash summer of 1987 – huh?

Detrick described LPL in the note as “steadfastly bullish” and opposed other bear arguments, but emphasized that he was not dismissing the potential for a significant pullback in the stock market.

“Adjustments are a normal part of investing and the S&P 500 index has not pulled back 5% so far this year, something that happens on average three times a year,” he noted.

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