It’s been almost four years since the stock market embarked on this remarkable bull run. Since March 9, 2009, when the Standard & Poor’s 500 bottomed out, the market has more than doubled. After such an extended rally, it’s only natural to wonder if it’s time for the increase in stock prices to start petering out.
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But there are several signals indicating that there’s a possibility that the bull market still has a ways to go. Here are six indicators showing that there may be life in this market yet.
Last week, the S&P concluded its sixth straight week of increases. That marked the first time since last August that it had so many consecutive positive weeks.
Last month, the S&P notched eight straight days of increases. That may not sound like the most impressive winning streak ever, but the S&P hasn’t had a streak that long since November 2004.This market isn’t moving in fits and starts: It’s showing continuous, regular growth.
The Standard & Poor’s 500 Index increased by 5.5 percent in the month of January, which is about half of a good return for an entire year. That kind of performance bodes well for the rest of the year. Birinyi Associates looked at the past 50 years, and found only eight other years in which the S&P had risen by 5 percent or more in January. In the ensuing 11 months, not even counting that January increase, the market has added an additional 12.7 percent.
3. Price to earnings ratios.
Bull markets tend to cause P/E ratios to run up. During the bull run that began in the 1980s and ended when the dot-com bubble burst in 2000, the collective P/E ratio for the S&P 500 rose from 7.7 to 28.6. But currently, the S&P 500′s trailing 12-month P/E is just about 14.4. That’s not just half as much as the P/E we saw when the tech fever faded; it’s even still below its long-term average of 15.