Several years ago, the New York Times reported “Forget Stock Market Forecasts – They’re Less Than Worthless”. The major Wall Street firms all expected the bear market to continue into 2023, but the stock market had already touched bottom on December 28th of 2022. In part, these views went hand in hand with the broad consensus view made by leading economists at the beginning of the year that “a recession in 2023 was almost a certainty”.
Notwithstanding all this negative sentiment, the S&P 500 climbed the Wall of Worry, once again, gaining 20.7% in total return so far this year. Many investors, including Wall Street Strategists, are surprised, if not perplexed, by the strength in the market averages. Golden Eagle Strategies has been a distant voice in expecting a major stock market recovery. We reported in our February Monthly Update that a new bull market may be underway based on five indicators that we track to measure the market pulse.
Golden Eagle does not offer opinions or subjective judgements in the course of its work. Instead, we use history as a guide in order to determine where the stock market is headed. History is now telling us that an all-time market high is very likely to occur before this year is out based on historical evidence dating back to 1970. The stock market, as measured by the S&P 500 Index, has recorded double-digit gains in the first six months of 8 bull market cycles since 1970. In each of the 8 cycles, the stock market moved to a higher level by year-end as can be seen in the table below.1
The S&P 500 Index has posted an additional gain of 12.0% on average in the second six months of the first year for all 8 previous bull markets. On this basis, a 12% advance from the index close of 4588 on July 31 would elevate the index to 5372 by year which would be higher than the previous record high or 4796 recorded on January 3rd of last year. At this juncture, the S&P 500 Index is just 4% away from breaking into record territory. Given the evidence at hand, we believe investors can look forward to higher stock prices by year-end.
1Golden Eagle Strategies Research
Several years ago, the New York Times reported “Forget Stock Market Forecasts – They’re Less Than Worthless”. The major Wall Street firms all expected the bear market to continue into 2023, but the stock market had already touched bottom on December 28th of 2022. In part, these views went hand in hand with the broad consensus view made by leading economists at the beginning of the year that “a recession in 2023 was almost a certainty”.
Notwithstanding all this negative sentiment, the S&P 500 climbed the Wall of Worry, once again, gaining 20.7% in total return so far this year. Many investors, including Wall Street Strategists, are surprised, if not perplexed, by the strength in the market averages. Golden Eagle Strategies has been a distant voice in expecting a major stock market recovery. We reported in our February Monthly Update that a new bull market may be underway based on five indicators that we track to measure the market pulse.
Golden Eagle does not offer opinions or subjective judgements in the course of its work. Instead, we use history as a guide in order to determine where the stock market is headed. History is now telling us that an all-time market high is very likely to occur before this year is out based on historical evidence dating back to 1970. The stock market, as measured by the S&P 500 Index, has recorded double-digit gains in the first six months of 8 bull market cycles since 1970. In each of the 8 cycles, the stock market moved to a higher level by year-end as can be seen in the table below.1
The S&P 500 Index has posted an additional gain of 12.0% on average in the second six months of the first year for all 8 previous bull markets. On this basis, a 12% advance from the index close of 4588 on July 31 would elevate the index to 5372 by year which would be higher than the previous record high or 4796 recorded on January 3rd of last year. At this juncture, the S&P 500 Index is just 4% away from breaking into record territory. Given the evidence at hand, we believe investors can look forward to higher stock prices by year-end.
1Golden Eagle Strategies Research
Manager of the Golden Eagle Growth Strategy
