“I look to the future because that’s where I’m going to spend the rest of my life.” —George Burns
The stock market is now up more than 11% in 2021, but we could have a normal 15% or so drop at anytime.
Here are four bullish statistics that Ryan Detrick, chief market strategist for LPL Financial found recently that suggest this bull market is alive and well.
First, the S&P 500 Index was up just under +6% in the first quarter. Since 1950, when the S&P 500 was up between +5-10% in the first quarter, the market gained another 12.4% on average and was higher 86.7% of the time for the rest of the year.
Second, the December Low Indicator is another positive indicator. This indicator was created by Lucien Hooper, a Forbes columnist in the 1970s. It says that if the S&P 500 closes beneath the December low during the first quarter then future weakness is probable. But if the low holds, then higher stock prices could be in order. Stocks held above the December lows in 2021 and this could mean continued higher prices, as the S&P 500 was up more than 18% on average previous years when this level held and incredibly was higher 33 out of 35 years.
Third, the S&P 500 was up nearly +54% in the 12 months ending March 2021, one of the largest yearly gains ever.
One year later the S&P 500 was higher more than 90% of the time, with only the year after the 1987 crash showing losses. “It might seem counterintuitive to most investors, but big rallies like we’ve seen tend to mark the start of bull markets, not the end, so we wouldn’t bet on this bull market ending anytime soon,” explained LPL Financial Chief Market Strategist Ryan Detrick.
Lastly, overall market breadth is extremely strong. This isn’t what you see at the end of bull markets. It usually happens at the start of new bull markets. More than 95% of the components in the S&P 500 are above their 200-day moving average, a level only seen two other times, in December 2003 and September 2009. You may recognize these two years marking the bottoms of two long bull markets.