$DIA, $SPY, $QQQ
FLASH: 10 years Friday the US stock market hit the bottom of the Great Recession.
Today, 10 years later, the US stock market is acting as if the economic expansion, now in its 117th month, is going to continue and likely accelerate. The S&P 500 is up 10% YTD
- The benchmark index has delivered a 10-year annualized total return of 17.8% since its financial crisis bottom on 9 March 2009, matching the annual gains 10 years after the Y 1987 crash and the August 1982 bottom.
- When the trailing 10-year return gets up to this territory, it typically means the Bull cycle is far along but not marked its end.
- Nevertheless, many professional and individual investors have been reluctant to embrace the Y 2019 comeback as gauged by sentiment surveys, fund flows and hedge-fund positioning.
Since the S&P 500 tapped 666 on 6 March 2009, and reached its closing low at 676 at precisely 1:00p ET, the index has delivered a 10-year annualized total return of 17.8%.
This matches the annual gains posted by the S&P exactly 10 years after the October 1987 market crash at 17.2%, and after the August 1982 bottom at 17.6%, when the greatest modern Bull market began.
So, staying or getting invested when stocks have been most hammered and investors are questioning the long-term wisdom of equities has been rewarded with returns roughly 1.5X the long-term average.
And, no matter the pace of the economy or positions of policymakers, the market metabolizes it all by breaking the world down into these 3 elements: corporate profitability, the cost of money and crowd psychology.
A Key element of this leg of the Bull’s rally is how reluctant many professional and individual investors have been to embrace it.
This is likely the collective memory of the last Fed engineered correction governing the actions and impulses of investors many of whom have enjoyed a 16% annual return for 10 years, and are caution having a hard time believing this Bull market has much more left to offer.
They are Short in a big way, and those bets can bite, and drive the indexes into record Bull territories.
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish in here.
Have a terrific weekend.