Why the Bull Market Isn’t Done Breaking Records Yet

We’re in the longest bull market in history… at least according to some people.

The Wall Street Journal says Wednesday marked a record 3,453 days since the S&P 500 hit its low of 666 on March 9, 2009. That’s nine years, five months, and 13 days.

But, Forbes says the market hasn’t reached a milestone—yet.

The magazine says the longest bull run belongs to the 12 1/2-year period running from October 1987 through March 2000. The current bull market would need to run through 2021 to break that record.

Part of the problem is that defining a bull market is difficult.

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Market analysts generally define a bull market as a period when stocks keep going up without falling more than 20%.

But that number is arbitrary…

For example, on October 11, 1990, the market fell by 19.9%, which technically isn’t the end of a bull market. Some analysts round up to 20% and say the rally ended there. (Seriously, that’s the debate some journalists are having right now.)

We won’t get into semantics… What’s important is that the bull market is nine years old and counting.

Of course, people who see the glass half empty think we’re “due” for a big pullback… or even a bear market.

But just because we’ve been in a record-long (depending on whom you ask) bull market doesn’t mean it will end soon.

In fact, we could see even higher gains from here. That means there’s more time for you to profit…

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These Three Signals Are Still Flashing Green

Regular readers know we’re bullish at the Daily.

It’s not because we get caught up in the headlines… We’re bullish because the data backs us up. Right now, three of our favorite indicators are flashing buys.

The first is Dow Theory. We told you about this indicator back in July 2017.

Dow Theory compares the action of the Dow Jones Industrial Average (big manufacturing companies) with the less popular Dow Jones Transportation Average (big companies that transport goods).

When both indexes are in uptrends, Dow Theory says you should buy.

Today, both indexes are in confirmed uptrends. In fact, the transportation index closed at a new high on Tuesday.

Another signal we look at is credit growth. As long as people are borrowing, the economy is growing.

And credit is still growing. According to the Federal Reserve Bank of New York, credit grew to a new all-time high in 2018.

The third indicator we look at is corporate profits.

As I wrote in August 2017, the market usually rises in tandem with the profits of S&P 500 companies.

And with President Trump’s tax cuts coming into full effect this year, we expect profits to surge 33%. The market typically doesn’t go through a major decline when profits are surging.

The fundamentals are pointing to a continued bull market. That means you should continue to own stocks.

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When Will the Ride Be Over?

You’ll hear many pundits trying to call a top of the market. Ignore every one of them. Instead, watch for the signs I mentioned above…

If you’re wondering when to sell, there’s no hard and fast rule. But one thing I like to watch is price action. It’s often a great indicator of market psychology.

Two simple ways to follow price action is to watch market trend lines (see here) and 170-week moving averages (see here).

As long as the S&P 500 stays above these lines, we’re in a bull market… and you should continue to hold onto your stocks.

Regards,

Nick Rokke
Analyst, The Palm Beach Daily

P.S. Have you stayed on the sidelines waiting for the bull market to crash? Tell us how you’re playing this record run right here…

Feedback on what’s behind the political division in the United States continues to roll in (see original essay here)…

From R.G.: If President Trump can get Congress to pass a law allowing digital currencies (and I believe he’s working on it), then it won’t matter if the states try to issue their own digital currencies.

From Ira C.: Talking about secession by states is just nonsense! We already fought a war over it and settled the issue. What a waste of time.

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