Finally, finally, finally the S&P 500 index closed at a new all-time record Friday.
Several times the large cap benchmark U.S. index tried to surpass its previous all-time closing high of 2872.87 of January 26th and several times it failed. But Friday’s close of 2874.69 did the trick.
In fact, it took seven months, or 145 trading days, for the S&P to recapture its previous high, nearly three times the length of the average correction. For all the fear and handwringing that produced on Wall Street and in the media, its biggest decline was a “whopping” 10.2%, just about the bare minimum you can have and still call a correction.
This week also marked the date on which this bull market became the longest of the past hundred years. But it needed to hit a new high for that mark to stand, too. Otherwise, market historians would have recorded the end of this bull on January 26th, because bull markets are measured from trough to peak.
OK, so now that that bit of record keeping is out of the way, what next? What does this bull market need to continue and even go higher?
First, it has to at least maintain and probably surpass this new all-time high for several trading days. Only that would show this move is sustainable. If the S&P 500 immediately starts falling again, that would be a bad sign.
Second, the Nasdaq Composite index and Russell 2000 small-cap index also closed at all-time highs Friday. The Dow Jones Transportation Average hit a new record high earlier in the week.
But the Dow Jones Industrial Average is still some 826 points, or more than 3%, shy of its January 26th all-time high. True, the Dow, with its surfeit of large multinational companies and big exporters, has suffered more from President Trump’s trade wars than has the S&P, and so might not hit a new high until those big trade issues are resolved (which doesn’t appear to be soon). But the Dow will eventually have to confirm the other indices’ all-time highs for this bull market to keep going.
Third, we’ll need to get through September, the worst month for stocks on the calendar when the Dow loses an average 1%, and October, which has suffered three of the biggest crashes in stock market history and which, Mark Twain said, was “one of the peculiarly dangerous months to speculate in stocks. The others are July. January, September, April, November, May, March, June, August and February.”
October also begins what is typically and almost always the best 12 months of stock performance in the four-year presidential election cycle. But we’ll have to get there intact first.
GoldenEgg Investing will not publish a market commentary next Friday because of Labor Day weekend.