What If the Bull Market Ended 14 Months Ago?

Conventionally, we measure bull markets from their lows to their highs, and that’s probably as it should be. But what if we broke the rules by a little?

If you allow me a little latitude, I propose that we can say that the bull market ended on January 26, 2018 when the S&P 500 closed at 2,872.87.

Well, yes, technically that is correct. By August, the S&P 500 broke that peak, but here’s my point—it didn’t break it by much. On a closing basis, the S&P 500 topped out at 2,930.75 on September 20, 2018. That’s a gain of 2.01% in the eight months from the January top.

Two percent in eight months ain’t that great. Let’s bear in mind that from the March 2009 low to the January 2018 peak, the stock market averaged a gain of more than 17.6% per year.

Many sectors and individual stocks never made new highs, and they’re still well below their January 2018 peak. For example, the S&P 500 Value Index never made a new high. It’s currently 6% below its peak from 14 months ago. The S&P 500 High Beta Index also never made a new high. The Consumer Staples sector is way down from its peak. The S&P 500 Industrials also never made a new high. Fourteen months later, the overall S&P 500 is still below that early 2018 top.

This chart shows the S&P 500 in black along with the S&P 500 Value Index in blue and the S&P 500 Financials in red.

So what did make a new high? Tech, and lots of it. The Nasdaq Composite and the Nasdaq 100 have done very well.

Except for a nasty spill in December, the market hasn’t experienced gigantic losses over the last 14 months. Perhaps this is a stealth bear market. Instead of tumbling for a big loss, it’s simply not doing much of anything for an extended time.

Posted by on April 1st, 2019 at 10:03 am


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