News Column

Stock records are probably still a good thing

June 23, 2014

A: Investors want to celebrate the stock market's march to new highs. And many are. But there's still a feeling of dread that maybe hitting never-before-seen highs is somehow a warning of a top.

But investors forget bull markets can push into new high ground many times before the market's momentum runs out of steam. And if history is a guide, this current bull market can deliver many more jumps into record territory before investors should get nervous, according to an analysis by Sam Stovall of S&P Capital IQ.

The current bull market isn't a baby, true, as it's 63 months old. That makes the bull market, starting in 2009, older than the 58-month average. But stocks have only notched new highs in 5% of all trading days, Stovall found. That's below the average.

In all the bull markets since 1949, stocks have hit new highs in 7% of trading days. Stovall also found during long-lasting "secular bulls," stocks hit new highs 9% of the trading days.

If investors start to see the number of trading days that stocks hit new highs reaching 7% or higher, that's when they should start to bemoan, instead of celebrate, the push into rarefied air, at least according to history.

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Source: USA Today

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