For data buffs: Stephen Suttmeier of BAML points put that this is the 5th-longest S&P 500 streak above the 200-day MA going back to 1928.



Source:  MLPF&S

Category: Markets


6 Responses to “5th Longest S&P500 Streak”

  1. supercorm says:

    Secular bull market…

    … I will point out that in 1982 vs 2014
    P/B 1.1 vs 2.7
    P/E 7.7 vs 18.6
    P/S 0.8 vs 1.7
    Div Yield 5.8% vs 1.9%
    10yr Gov Bonds 14.0% vs 2.5%
    HY Bond 16.4 vs 5.3
    Inflation 8% vs 2%
    Lets not even mention the governments and consumers debt levels…
    Seems like secular bull market starts when things are overdone. Sentiment depressed leading to low valuations, minimal flows, and minimum interventions from CBs and Government. Its difficullt to justify a secular bull market when rates cannot go lower from here, or cannot have any significant positive contribution. $4 trillion balance sheet, not to mention UK, EUR and China stimulus (we’re still going up on bad news thinking we’ll have EVEN more stimulus) cannot be part of a “secular bull market”. Give me $4 trillion and changes, and I will make you a secular bull market. Stimulus in China have less and less impact, in Europe, could be too little too late. In the US, at some point bad news will be bad news, the balance sheet still hang above and will hurt the “good news is good news” scenario, if it ever shows up. So I’d say, its a secular bull market as long as CBs and Governments keep supporting it, but there is a diminishing rate of return on those stimulus, and it will have to be reversed, no matter what, and will be headwind to growth. The question is not if the economy can survive without stimulus, but can it survive a shock (China, Europe, etc) as our CBs gods exhausted all of their resources…

    • Liquidity Trader says:

      Those data points are excellent, but you make 2 significant errors:

      1) You compare 2014 to 1982. The better comparison is 1982 to 2009. Note 5 years into this rally, we actually lag the 1982-87 move higher.

      2) You unwittingly make a key point: The competition to equities from high yield and even treasury bonds is minimal YOu dont need a Div Yield of 5.8% when the 10 year yields 2.4%

      Lastly, inflation at 8% makes the 2% CPI look like Goldilocks.

      • supercorm says:

        You are totally right re: 2009 as a key reference. My point is when looking today, for a u/w investor, the secular bull mkt doesn’t look as attractive as in 2009. Great if you were in in 2009, good luck if you’re looking to jump in today. The second point, leaving inflation aside, is that the upside in 1982 was greatly helped by falling rates amid attractive metrics and lack of investors’ enthusiasm (ie weak positioning). Although rates could stay low for décades to come (I know, I lived in Japan…), the positive contribution from low rates is diminishing. Finally, leaving ratios aside, and probably because consumers are still drowing in debt (less than in 2007, but look back to 1990-2007 average…), the top line growth ain’t solid. Buybacks and growing margins (back to 1929 levels) are helping, but look at all the margins contributors individually, ie US$, Tax Rate, Wages, Rates, they are not going in the right direction.
        Finally, beside buybacks, I think most profits are greatly influenced by accounting rules. Exipration of provisions for depreciations, companies have less “expenses” on their books, resulting in higher net income, when in fact EBITDA margins are declining. As discussed by the BLS, economic profits are falling, accounting profits are rising. This, at some point, will catch up as well… it should… I think.
        Overall, great to jump in the mkt in 2009 for the same reasons you jumped in in 1982 when I was 10 years old. However, just on the “sentiment”, or “positioning side, everybody’s in the stock market, on lack of alternatives (the T.I.N.A. trade …), and that factor alone suggest prudence …

  2. CD4P says:

    Another one for data buffs:

    On yesterday’s CNBC Squawk Box, smokin’ Joe Kernan owned up to not just having seen “Jaws”, but also “Jaws 2″, “Jaws 3″, and “Jaws 4″. This came up because Joe made the connection between the video they were running (of a great white biting an underwater cable and Joe recalling how the shark bit the dust in “Jaws 2″. All this from a guy who boasts he has never seen “Star Wars”.

    [I was the lucky viewer because my readjustment from Sweden time has me arising at 4am these days...]

  3. Concerned Neighbour says:

    It’s certainly counter-intuitive that this is happening while Europe and Japan are precariously close to recession, and earnings growth including supposed one-time adjustments has been pretty mediocre. To me it’s astounding that the reaction to economic weakness is still, all these years of “temporary, emergency” monetary stimulus later is “hey, this is positive because it means we’ll get more monetary stimulus”, instead of, “hey, shouldn’t all this (temporary, emergency) monetary stimulus have prevented this economic weakness?”. The question is will we, or have we already, turned into Japan; that, QE and economic malaise in perpetuity. And if so, will these “markets” ever realize (or perhaps better phrased, ever be allowed to realize) that monetary policy is pushing on a string.

  4. Robert M says:

    The market can be irrational longer than the bankbook you use to support your short position.