By way of putting in a new high last week, we are officially out of the bear market, and now in a bull market. As of the time of writing, we are now 52% above the market lows of March 23rd. Wow, what a whipsaw. Total duration of the bear market…1 month. It took 5 months to get it back, which funny enough, is not the fastest.
You can see from the stats above, the average length of the recessionary bear markets is 27 months, with a median of 12 months. The good news for us now is that the average bull market is 3 years in length and returns 150%. But I think we all know by now things are anything but normal or average.
The past few articles I’ve written have been devoted to pointing out my reasonings for a sideways or weak market, at least through the election. The circus in D.C. has kept the market from looking towards the election, as it anticipates another round of stimulus. Latest reporting has the Republicans looking to do another $1 Trillion, while the Democrats are looking at a $3 Trillion package. However it works out, more money into the economy will be a short term win for corporate earnings, but is not something that can be sustained in the long run.
There are data points that give some positive signals. The past 100 days have been the best that the market has posted, since coming out of the great depression. Historically, when we have had a strong 100 day period, the next 12 months have been positive 90% of the time.
None of the dates indicated however, took place while in the midst of a pandemic, and within 3 months of an election, therefore I’m not putting much emphasis on this. I do put faith in a longer term move higher, when we get some clarity on what the next four years will look like from a fiscal standpoint. That we may not know till sometime after November 3rd.
I’m still sitting in the camp that we may see the market take a breath and it may be time to keep a little on the sideline, on the off chance we get to pick up some great companies at lower prices.
With that said, here’s the Buy/ Sell…
Mick Graham, CPM®, AIF®
Financial Advisor/Branch Manager Raymond James Melbourne, FL
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