By Andrew S. Parlin
There are two decidedly different ways to look at the market’s rally.
The first one invites caution. From its March 2009 low nearly four years ago, the S&P 500 has compounded at a spectacular annual rate of 24%. Against the backdrop of a long list of “overbought” signals, a cloudy earnings picture, and an economic recovery that appears to be struggling, why not bail? After all, this has been one heck of a good run.
The other way to think about the market is to study its progression since WWII and note that the two very long secular rallies (1942-1968 and 1982-2000) were punctuated by two periods where the market took a very long time to advance to new highs (1968-1982 and 2000-?). This approach would acknowledge that markets may well be extended on a short-term basis. But it would also beg the question whether we may at last be coming to the end of one of those protracted periods of going nowhere.
At the Inflection Point
During the 14-year period from 1968 until the
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