There’s a pattern in the data I’ve been studying that tells me something important about where we are right now — and where we’re likely headed over the next two months.
I’m not talking about predictions or gut feelings. I’m talking about what historically happens after major geopolitical events unfold. And the timing we’re at right now?
It’s significant.
We’re just over a month into the war in Iran, and if you’ve been following along, you know the first month after major geopolitical events typically shows negative returns.
The data backs this up — the average first month is negative, with only 46% of instances going higher, which is well below the typical 58% average we see in normal market conditions.
That first month represents the panic reaction phase. Fear dominates. Uncertainty drives selling. It’s the knee-jerk response to unknowns.
And even though we saw a huge bounce in the market Wednesday — the kind of sharp rebound that tends to appear when volatility is still elevated — it fits perfectly within this phase. I’ve taken advantage of that bounce by selling SPX call spreads with the VIX still signaling plenty of instability. Moves like that aren’t predictions, they’re just respecting the environment we’re in.
But here’s where it gets interesting.
The Data Flips After Month One
When I looked at what happens three months after a major geopolitical event begins, the pattern completely reverses. The probability of going higher jumps to 67% — that’s better than average odds. The average return is 0.8%, and the median return is 2.7%.
What this tells me is that after that initial month of reaction, investors start to buy the dip. They capitalize on discounted assets. The fear subsides, and the market begins to price in a recovery, which all makes sense when you think about it.
We’re also at a point where a retest of some recently broken support and resistance levels is likely. That kind of move is typical in volatile periods — a push back into a key zone, followed by a decision point. It’s consistent with the transition from panic to stabilization.
This creates an asymmetric opportunity. The first month is behind us. The next two months — historically — favor higher prices.
Now, does that mean we can’t go lower from here in the short term? Absolutely not. Day-to-day volatility will likely continue. My own line in the sand is lower than where we are right now. But two months from now, based on historical probabilities, we should expect the S&P 500 to be higher than where it is right now.
What This Means for Your Positioning
This isn’t about trying to perfectly time the bottom. It’s about understanding that the risk-reward setup is shifting.
The first month was the panic phase — and we saw exactly what the data suggested we’d see. Now we’re entering the phase where people start to come in and buy things that are trading at a discount, and historically, that leads to outperformance over the next 60 days or so.
Sector behavior is also confirming the transition. Financials (XLF) have been overperforming on strong days and underperforming on weak ones — acting as a catalyst in both directions. That’s exactly the type of leadership shift you tend to see when markets are trying to find their footing.
I’m not saying go all-in blindly. But I am saying that if you’ve been waiting for a window to start positioning for recovery, the historical data suggests this is it. The probabilities are tilting in your favor.
Stay disciplined, respect your levels and watch how this unfolds. The pattern doesn’t guarantee anything — but it does give us a framework to work with. And right now, that framework is telling me the next two months could look very different from the last 30.
Graham Lindman
Graham Lindman Trading
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P.S. LIVE at 2:30 PM ET: My Daily Tactic to Trade a High-Volatility Market
What a crazy turn of events these past few weeks…
I’m not even going to talk about what’s been going on with Trump and Iran.
But I do want to point out that although the VIX has fallen by a lot over the last couple of days, it’s still head and shoulders above the 20 level.
Which means we’re still in a relatively high-volatility market.
That’s where today’s class at 2:30 p.m. ET comes in.
My goal is to walk you through how I’ve been navigating this high-volatility market day after day…
Using the exact same morning setup… going after the exact same ticker… and targeting the exact same goal… a 50% payout within 60 minutes.
No guarantees in trading, of course…
But lately, we’ve been hitting our goal way more often than we used to.
So today, I want to clue you in before we go after the very next opportunity tomorrow.
Here’s your login link… and we’ll kick off at 2:30 p.m. ET sharp.
