Investors just finished another fantastic year... But they might not remember it that way.

U.S. stocks rose more than 25%. We never saw a correction. And there was hardly any volatility the entire year.

Still, the good memories might not hold up – because the year ended with a gut punch.

Most stocks spent the month of December falling... a fall that included one of the worst days of 2024.

It was an ugly ending to an otherwise banner year. But you shouldn't give up on stocks yet.

You see, the decline caused a rare setup in the U.S.'s oldest stock index. It's the kind of move that most folks hate to see... But according to history, it isn't a bad thing at all. Instead, it could lead to 16% gains next year.

Let me explain...

When I talk about "the market," I'm usually talking about the S&P 500 Index. It holds the largest 500 U.S. stocks. And that makes it the best broad benchmark for the U.S. stock market.

Still, most folks outside of finance still think of "the market" as a different index... the Dow Jones Industrial Average.

The Dow holds just 30 stocks. But it's got a longer history – and more name recognition with mom-and-pop investors.

Being so well known wasn't a good thing last month, though. The Dow fell for 10 straight days in December. Take a look...

Again, it was a tough ending to an otherwise incredible year. The Dow fell 6% over those 10 days. And it was the index's longest losing streak since 1974.

Surprisingly, though, this kind of streak hasn't been a signal to sell stocks throughout history. Instead, it has been fantastically bullish.

To see it, I ran the numbers going back to 1950. And the results are clear. Take a look...

Normally, following the trend is critical in investing. A streak of 10 straight down days should indicate a downtrend. But history shows this setup isn't that simple.

Instead, the Dow has a history of outperforming after these rare setups. The index soared 12% over the next six months and 16.3% in a typical year.

That's massive outperformance. Plus, stocks were up a year later 100% of the time.

Now, it's worth mentioning that this is a rare situation. We've only seen five other examples since 1950. So we don't have a large body of evidence to draw conclusions from. But even given that, this setup is obvious...

Stocks only fall for 10 days straight when folks are darn worried. But when we see so many days of declines, it means prices have fallen too far, too fast. The market is overreacting.

It makes sense that stocks tend to soar after these setups. And I expect we'll see the same thing play out in the months ahead.

U.S. investors had a fantastic 2024. It may have ended with a gut punch – but don't let that sour how your feel going into this year.

According to history, the Dow could jump 16% in 2025. Stocks are set up to keep rising... Don't miss it.

Good investing,

Brett Eversole