I suggested last year that maybe we were having a stealth recession and bear market. If that was the case, then the counting of the duration of this stock market cycle should begin again with last February’s bottom after the prior year’s May high and we can close out the 2009-2015 bull with a six year run. It would correspond to the profits recession that turned around in the last half of 2016 and the bottoming of the European and some Asian economies also in 2016.
Here’s a piece suggesting that the market situation was far worse in early 2016 than the 14.5% decline from the 2015 peak suggests.
While the major indexes held up relatively well in late 2015/early 2016, the story was quite a bit different for the average stock. From a January 11, 2016 USA Today story:
There is mounting evidence that the U.S. stock market is being decimated and undermined by a so-called “stealth” bear market…Indeed, the Standard & Poor’s 1500 index – a broad basket of large, mid and small company stocks – shows that the average stock’s distance from its 52-week high is 26.9%, according to stats compiled by Bespoke Investment Group through Friday’s close. “That’s bear market territory!” says Paul Hickey, co-founder of Bespoke Investment Group, the firm that provided USA TODAY with the gloomy price data.
Which means that perhaps we are at the beginning of a nice multi-year run-up from a true market bottom.
The charts below compare the breadth-based 50-week moving average in 2003, 2009, and 2016.
But that doesn’t stop the fear mongers from pitching the panic. This collection is from three years ago, but the same stories and same people are still warning of the impending crash today.
Comparisons of charts from previous market top periods and market bottom periods with the charts today show that today’s market doesn’t look anything like previous market tops and looks very much like previous market bottoms. This doesn’t mean that the situation can’t change, but it does say that the possibility of more market upside exists and we are not near “the end”.
Comparison of Today with two previous market tops:
Comparison of Today with two previous market bottoms:
Here’s to the new Bull. Wouldn’t that surprise everyone!