June 8: S&P 500 Index 2119. At the time of this writing, the S&P 500 Index is 15 points away from making an all-time high (amen to that). Are you as curious as I am as to how the current bull market compares to prior bull runs? In a word – “aged.” The following chart caught my eye.
It shows the length and point gain of the DJIA’s current bull market run and compares the current move (which began in March 2009 – blue line) to a composite of prior bull market moves (red line), as defined by Ned Davis Research.
Of course, the length of this move remains unknown but it is clear that the market advance is aged and, as you’ll see in this Friday’s On My Radar post, valuations remain high. Caution is advised.
Most asset classes (stocks, bonds, international equities, emerging markets, commodities and gold) have been gaining in price the last few weeks. That is unusual, but with our high-yield program in a buy and the CMG Opportunistic All Asset Strategy currently positioned in 36% bonds, 44% equities and 10% gold (0% cash), we are not complaining about the surprisingly high upside correlation and recent gains (current holdings in the pie chart below).
I’m often asked if my view is too bearish. I believe valuations can tell us a great deal about 10-year forward returns and there is not much optimism in those probabilities. Expect low equity and fixed income 10-year returns and the road to those low returns to be full of potholes.
However, global tactical all asset and other more flexible strategies may be able to do better. To that end, I can say we have plenty of exposure to equities and I’m ending this week’s post on that high note. Hope this week’s post finds you in good spirits as well.
The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change. They do not represent the opinions of CMG. CMGs trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts. Steve’s opinions and forecasts may not actually come to pass. Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.