The stock market is following a rare pattern that could signal double-digit gains next year

• The stock market is following a rare pattern that could signal big gains next year, NDR said.
• The S&P 500 rallied for five months straight this year, followed by three consecutive months of losses. 
• In previous instances when that’s occurred, the index posted double-digit gains a year later.

A rare pattern of gains and losses in the S&P 500 is flashing a bullish signal that the benchmark index could be in for a double-digit rise in the year ahead, analysts from Ned Davis Research said in a note this week.

A five-month winning streak earlier this year was immediately followed by a three-month selloff from August through October. That’s an unusual pattern in the history of the market, one that has only been observe four times since 1926. Importantly for investors, it’s typically been followed by a period of strong gains in stocks over the next year, Ned Davis wrote on Wednesday.