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What if the Bull Market Isn’t Dead?

Ben Levisohn

MAR 17, 2020

By the traditional definition, the S&P 500 is in a bear market—and then some. One technical analyst begs to differ.

By the traditional definition, the S&P 500 is in a bear market—and then some. One technical analyst begs to differ.

Stocks are in a bear market, and it isn’t even close—and that should mean the end of the bull market that began in 2009. But what if it doesn’t?

It’s a strange idea. These things should have definitions that we all rely on. A bull market occurs when an index like the Dow Jones Industrial Average or S&P 500 rises 20% off its low, and keeps going until it falls 20%, causing a bear market. By that definition, the S&P 500 had a number of near misses before the bull market that began in 2009 ended with the recent crash.

So why do I have that headline on this article? It has nothing to do with Tuesday’s big gains, spurred by potential government action to tackle the coronavirus. It’s because there’s another way of thinking about bull and bear markets, one that has to do with economic cycles, market trends, and other features, not just a number that might have been picked simply because we like round numbers.

So is the bull market dead? Here’s how David Tippin and Ron Meisels, technical analysts at Phases & Cycles, answered the question. “Despite all the gloom and doom, the answer is NO—this is still a bull market,” they write. “We are in the midst of a particularly volatile, news-driven correction that is unwinding part of a very long secular advance that began eleven years ago. This unwinding process is going to take time.” But when that process ends, the market could bounce back the way it did after the selloffs in 2011 and 2018.

But as Tippin and Meisels imply, the bounce back won’t happen quickly, They see the market bouncing back, then dropping again, before beginning a sustained rally. “The rapid scaling back of economic activity in response to the coronavirus and downward pressure of some longer-term cycles make it very unlikely that this current correction will be a short ‘V’ shaped bottom followed by a rapid recovery,” they write.

The data back them up. Sundial Capital Research’s Troy Bombardia notes that when the S&P 500 gets as oversold as it has been, the potential return over the following year was very good. The stock market often tested its low before the rally really began. One example: The S&P 500 gained 19.7% in the 12 months after hitting 899.22 on Oct. 10, 2008. But it dropped 24.8% from date through the market’s bottom on March 9, 2009. That’s just about another bear market within a bear market.

What they’re really saying, I think, is that the market tends to go up over time, though painful periods where stocks do nothing—the Great Depression, parts of the 1970s—do exist. If your time horizon is long enough—say, 10 years or more—it ultimately doesn’t matter whether it is a bull or bear market. The certainty that the market will head higher should pay off.


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