The market may possibly be nearing to hit new record highs, yet the price is not the only record it is expected to break.
With more than 62 months and counting, the S&P 500 index is nearing its greatest bull run since 1994 to 2000 and if it will continue with its rally for another two months, it will be regarded as the longest bull market run in more than eight decades.
There may possibly be several and intermediate-term downside although experts are unsure in recommending time corrections. On the other hand, they see five primary reasons in having a bullish long-term view on the S&P 500 namely:
1. A secular breakout above the recent decade’s price range.
2. Enticing stock valuations as against bonds.
3. A compliant Federal reserve policy.
4. Continued growth and expansion in the U.S. economy.
5. Cyclical sectors having much stronger trends than defensive areas.
When considering getting above levels from the previous decade, majority of analysts’ believe that this is indeed a much stronger structure that makes the possibility for higher highs and lows over the years to come.
Recording the ten-year rates of returns for the S&P 500 which goes way back to the 1930’s, its inflecting positively following a hit on negative territory for the first time in more than four decades. Should anyone want to make comparisons to the 2000 or 2007, there is definitely a big and considerable difference.
There are also those who don’t share the optimism and for some what they consider as the main reason of fuelling the rally is actually very much akin to what happened to the 2000 rally over a decade ago.
The possibility of another market bubble is not entirely unlikely since the impending one is attributable to the accommodative policies by central banks including the U.S. Federal Reserve Bank. Previously, this had been led to a housing bubble and is correspondingly creating a tech and credit bubble.
These type of things are simply unsustainable and that the possible conclusion will probably be unexpected and disappointing. Some even speculate that it won’t make it past the 64-month mark average. Now that there is also a limit to the market downside, valuations to bonds although considered to be very much compelling, there are several options for stocks and with nowhere else to go, stocks will inevitably continue to move up.