Fifth-Year Rally Precedents

Click to enlarge

How have markets done in the 5th year of a bull run?

The chart above comes from Jeffrey Kleintop, LPL Financial’s chief market strategist. The bull market that began in March 2009 is the seventh to last at least four years since World War II. Of those seven, only four ran for five years or more, with an average gain of 22%. The four-year gains ranged from 58% in October 1990, to 138% in August 1982.

Before getting too excited, note that this is an exceedingly small sample set, one that is barely better than even money (57%).

One other noteworthy factoid: David Wilson of Bloomberg notes that two and one half months into the new year, “the S&P 500 has yet to retreat for more than two days in a row this year.”

That is a helluva streak just begging to be broken . . .


Chart of the Day
David Wilson
Bloomberg March 13

Category: MarketsTechnical Analysis

2 Responses to "Fifth-Year Rally Precedents"

  1. David Wishart   March 21, 2013 at 2:52 pm

    This rally is built on escalating levels of margin debt and collapsing short interest. Margin debt is at the same level it was just before the market peaked in 2007. The real effect of the payroll tax holiday expiring will start to show up in Q1 earnings (Fed-Ex for example) which I think will soften markets enough to get the margin calls to start.

  2. benleet   March 21, 2013 at 8:12 pm

    What has caused the "bull run"? The employment to population ratio has been dropping, the annual median wage income has been declining, relative to 2008 ratios there are about 10.7 million fewer workers, household debt levels to disposable income are around 109%. Corporate profits are up 87% since July 2009.