Earlier today the S&P500 hit a new intraday all time high of 2,373.23 before fading some of the gains, on the day that matches the longest bull run in S&P history. And absent a “force majeure” event and a 20% drop in the S&P in the next few hours, the length of time that has passed without a 20% drop in the S&P500 will set a record with tomorrow’s opening bell.
Below we show some charts that put the longest, if most artificial, bull market in its proper historical context.
On August 22, the current bull market is poised to become the longest on record…
… however it still has room to run in terms of percentage appreciation: from its March 2009 low, the current level of the S&P is 321% higher; it will need to gain another 4% to surpass the Great Depression bull market of June 1932 – March 1937 which saw a 325% rebound. To become the greatest bull market ever in percentage terms, the S&P will need to gain nearly another 100% from here, to surpass the 417% increase posted in the October 1990 – March 2000 market, which culminated with the dot com bubble.
Breaking down the bull market by sector shows that huge gains for companies such as Amazon and Apple helped propel the outperformance of the consumer discretionary and technology sectors.
How about valuation? As shown in the first chart below, stocks recently were the most expensive on record relative to their long term average of 15.1 on a forward basis and 17.2 on a trailing basis. However, the recent Trump tax-cut inspired burst in corporate profits helped pulled valuations back towards the norm. The question, of course, is whether the current global trade war (or any other black swan event) will make a mockery of projections. One possible such “unexpected event” is a spike in yields: as the second chart below shows, stocks have been supported throughout the run by Fed policy which kept interest rates low, permitting corporations to engage in a record amount of buybacks. The recent modest rise in yields, coupled with a spike in market volatility , helped to cause a recent market correction.