From RBC Capital Markets via FTAlphaville:
We used the US blue chips for various reasons (for example, they have the longest clean data set available, since 1897). We could have also used the S&P and its current move off the 666 low in 2009 (the Market Gods have a demonic sense of humour it seems).
As it currently stands, the current bull is the 4th longest out of 23 in terms of duration, 6th largest in terms of percentage change. It is well beyond both the mean and median based on this data set. There is no reason why the market cannot rally further, even becoming number one in either percentage or duration, or both, of being up on the year, this despite our “circling the drain” feeling about the especially as the liquidity machine is still pumping in Japan, China and Europe. Given we agree with William Hamilton (4th editor of the Wall Street Journal and author of The Stock Market Barometer in 1922) that the stock markets are “soulless barometers”; the underlying bid suggests optimism in 2015. As long as the market views the Central Bank intravenous lines as a good thing, we respect the bullish trajectory.
But at some point out, the market will view the medicine as the poison. After all, consistently rising home prices were once also thought of as a good thing. Until the dramatic change. We remain vigilant.
And wisely so. My own view is that Jeremy Grantham still has it right, with the US Presidential election in 2016 an irresistible beacon, somewhere above 2200 for the S&P500, provided China holds it together until then. That would put it about equal with the greatest bull markets of the 20th century in duration but far short on price.
I don’t expect the ASX to be materially higher than today before the rout.
