S&P 500 has a Chance at Exiting its Bear Market

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
June 9th, 2023

2 mins read

The S&P 500 closed above a price level Thursday that signified its exit from the longest bear market since 1948. For Market Bulls this is good news and probably somewhat of a relief.  For market bears it isn’t the most welcome situation.

The S&P 500 had been in bear-market territory for 248 trading days.  The longest bear market prior to this one was 484 trading days that ended on May 15, 1948.

The key thing the markets need now is to continue to follow through to the upside.

If history I any indication as to what to expect from here…

Figure 1: 120-Day Japanese Candlestick Chart on SPY
Figure 1: 120-Day Japanese Candlestick Chart on SPY

Anticipate a Sustained Bull Market

According to Dow Jones Market Data, at median and average performance following past bear-market exits, based on data stretching back to 1929, is largely positive for periods from one month to a year.

Should things work out in a similar fashion this time, based on this data, we would be leaning more bullish than bearish in our option trading research.

Per Sam Stovall, chief investment strategist at CFRA, of the 14 bear markets since WWII, only two — 2000-’02 and 2007-’09 –– produced exits that saw the S&P 500 quickly slump back into a bear market by declining more than 20%. (data obtained from marketwatch.com).

Morning Reports Lists

Figure 2: Morning Report Lists from www.tomsoptiontools.com.
Figure 2: Morning Report Lists from www.tomsoptiontools.com.

The NASDAQ appears to be ending up its 7th positive week in a row of showing a gain.  Should that happen it will be the longest streak since November of 2019.

The Dow Jones Industrial Average is possibly going to end this week positive, which would be the 2nd week in a row its accomplished that.

Also, the NASDAQ hit an all-time high on an intraday basis today.

When looking over the Morning Reports listed in Figure 2, maybe you start analyzing and discussing with your broker stocks that are considered NASDAQ stocks, those with ticker symbols 4 letters or more.

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