Is the Bull Market Done? History Holds the Answer

adam_woodsSince the beginning of the year, the U.S. stock market has gone virtually nowhere. The benchmark S&P 500 Index is the only major average that is in the black in 2014, up a measly 1.8%.

Meanwhile, all the other popular averages are in the red for 2014. A closer look below the surface shows that the Russell 2000 and Nasdaq Composite indices are under-performing their peers.

So, are the good times done for good? We may be able to predict the answer by remembering what Mark Twain said, “History doesn’t repeat itself, but it does rhyme.” Let’s take a brief look back at history, shall we?

Healthy or Negative?

In order to analyze the current market, you need to put the sideways action in the proper perspective. Keep in mind that markets can only do three things: move up, down or sideways. Large uptrends are known as bull markets and large downtrends (defined as a decline of 20% or more from a recent high) are known as bear markets. Sideways action (present market included) are normal from time to time and happen within larger bull and bear markets.

Aging Bull
The current bull market began in March 2009 and just celebrated its 5th anniversary two months ago in March. The past two major bull markets both ended shortly after their 5th anniversary (see chart below). So, keep in mind that this market is aging and eventually will end. The only question is when, not if (every bull and bear market in history has a definitive beginning and end).

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Some bull markets last much longer than others, but I realize that this one is getting old and the easy money is likely behind us for now. So, it is especially important for you to stay tuned in while we help you navigate all environments.

Healthy Until Further Notice

Last year, the S&P 500 soared 29%, which was one of the strongest years in history (the average annual return for the stock market is around 8 -10% over the past 100 years — including both bull and bear markets). So, after a 29% rally, the market is simply pausing to digest its very strong move.

Only time will tell if this market breaks out and continues to rally, or if this is a topping process and we drop down from here. So far, the evidence suggests we are heading higher, not lower. But that will change if the major averages take out their 2014 lows.

Note from Midas Legacy Editor: Last year, Midas Wave Alert members kicked the pants off of the S&P 500, and we’re doing it again this year! While the S&P 500 is only up 1.8% this year, members have already locked in the following stellar gains: +45.57%, +19.17%, and 17.43%.

If you are looking for market-crushing results, just check your email for an exclusive invitation to join The Midas Wave Alert service.

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