Along those lines, the stock market's top reached yesterday looks like it has a long way to go before peaking. That makes sense to me for lots of reasons, but let's stay with history today.
Chart of the Day: Bull Market Has Room to Run describes the market's outlook this way:
"The S&P 500 is set to enter the fifth year of its current bull market. For investors who are worried that the rally is getting long in the tooth, this chart should calm some of those fears.
Dating back to 1932, the average bull market for the S&P 500 lasts 57 months, according to Strategas Research Partners. From the fifth year of a bull market through its conclusion, the index averages a 33% gain, illustrating how a big chunk of the market’s rally usually takes place in the latter part of a bull run.
With the Dow reclaiming record highs on Tuesday and the S&P 500 not far behind, few are expecting the rally to falter anytime soon. The Fed’s efforts to prop the economy remain aggressive, corporate earnings continue to be resilient and the housing market is recovering.
Investors have finally taken note, as mom and pop have starting dipping their toes back into the market over the last few months.
“Sentiment is optimistic, but it’s not euphoric,” Chris Verrone, head of technical analysis at Strategas, said . . . “That’s a big difference.”
He made the argument that the “pain trade” for investors remains to the upside. “Strength confounds those waiting for a pullback.” . . .
The case is still quite strong for the bull market to continue,” Verrone said. “We will have a pullback at some point, but it’ll be in the context of a bigger rally.”
History is on the side of continuing gains in the market.
So is the simple principle of reversion to the mean, meaning simply that the pendulum swings both ways and the market's level is now only back to where it was several years ago.
While the market has only regained its former level, earnings and dividends are mucher higher than they were in 2007, and the greatest financial crisis of our lives is over.
Domestic energy supplies are plentiful and to me it looks like even the government will begin to clean up its drunk and disorderly approach to wastefully spending the people's money.
It won't be straight up, up and away, of course, but the trend is still our friend.
Don't laugh but a Dow 20,000 in the next few years is a distinct possibility.
And within the next ten to fifteen years, Dow 30,000 looks even more likely.
With dividends growing all along the way.
At least that's my view.