An S&P 500 Cyclical Bull?
Say it ain’t so! A new bull market in the mighty S&P 500?!? Have the rampaging bulls finally thrust the lethal sword deep into the cold black heart of the vicious Great Bear of recent years?
Believe it or not, but next week marks a major milestone in the US equity markets that is going to delight the bulls to no end and greatly discourage the handful of remaining bears. On October 9th, 2003, merely four trading days away as this essay is published, the S&P 500 will officially be in a bull market again!
That’s right fellow contrarians, an S&P 500 bull market is upon us!
The classical definition of a bull market is a 20%+ gain in a major asset class over a time period greater than one year. A sub-20% move in a single year falls under the official bull-market threshold since it is more of a grinding sideways trend. 20% is a nice round number and has just tended to stick throughout history as the benchmark of choice for defining a bull market. A relatively weak move, even with longevity, does not make a bull market.
On the other hand, a fast 20%+ move in less than one year has not yet proved its staying power so it doesn’t qualify as a bull market either. This time hurdle is a very wise distinction to make in defining a bull market since it filters out sharp yet short-lived bear-market rallies. The S&P 500, for example, has witnessed massive and violent 21% rallies in recent years, one in late 2001 and another in the summer of 2002, yet both of these major events failed to survive for an entire year. A relatively strong move, without longevity, does not make a bull market either.
But when the markets can somehow manage to cobble together both key ingredients, a 20%+ gain over a period of one year or longer, an official bull market is born. As of October 9th, the flagship S&P 500 will have managed to bag both the 20%+ and the year, earning itself a place of distinction in the rarified halls of official bull-marketdom.
Love it if you’re a bull, hate it if you’re a bear, or shrug your shoulders if you just don’t care, but the S&P 500 (SPX) index prices speak for themselves and the facts are clear. Another S&P 500 bull market is preparing to be born into the world with a due date of next week.
This whole fascinating twist of fate is readily apparent and crystal-clear in a short-term chart of the S&P 500. Our first graph this week zooms in to this epic move that has catapulted the elite SPX to the very verge of official bull-market territory once again. It’s been one heck of a rally any way you slice it!
-adam hamilton
10/3/03
zealllc.com
not a subscriber but this was on the GATA site of which i am- |
