Has the bull market ended despite the five-month continuous rise in the US stock market?
After five months of gains, the probability of the S&P 500 index rising after 6 and 12 months is 82% and 93% respectively, with average returns of 6%+ and 12%+.
The stock market performance in August was disappointing, which shouldn't come as too much of a surprise.
According to the Stock Trader's Almanac, August was the second worst-performing month for the S&P 500 index in the past 35 years. Historically, September has also proven to be somewhat challenging.
However, Seth Golden, Chief Market Strategist at Finom Group, believes that the end of the S&P 500 index's five-month winning streak is not entirely bad news.
Earlier this year in February, Golden predicted that the S&P 500 index would reach 4,350 points and advised investors to take advantage of the weakness in large-cap growth stocks.
The bull market in US stocks is not over yet
Regarding the current position, Golden cited data from Ryan Detrick of Carson Investment Research.
Detrick studied the cases where the S&P 500 index had five consecutive months of gains since 1950 and found that in 79% of those cases, the upward trend continued for six months.
Although this time it may not be the case, Golden drew some encouraging data from it, such as the probability of the S&P 500 index rising after six and twelve months following a five-month rally being 82% and 93%, respectively.
The strategist stated, "The average return of the S&P 500 index after six and twelve months is also 6%+ and 12%+, respectively."
As Golden pointed out, the bull market was confirmed on June 8, 23 years ago, when the S&P 500 index rose 20% from the bear market low. This transition lasted for 165 days.
"Except for one instance, previous bear markets to bull markets have lasted longer than the current 9-month cycle and have seen greater gains. It is highly unlikely that a new bear market will begin after 9 months and not bring further returns in the next 12 months."
