The
traditional
fourth-anniversary
gift
is
fruit
or
flowers,
according
to
the
arbiters
of
etiquette.
Which
fits
pretty
well
with
this
market
moment,
four
years
to
the
day
since
the
Covid-crash
low,
which
finds
investors
now
savoring
sweet
returns
and
adopting
a
distinctly
rosy
outlook.
Since
that
distressed
moment
of
mass
fear
and
urgent
asset
liquidation,
the
market
has
done
what
it
typically
does
following
a
panic:
delivered
profits
far
above
average.
The
four-year
total
return
for
the
S
&
P
500
since
March
23,
2020,
is
just
about
150%,
or
25.7%
annualized.
And
that’s
including
a
25%
setback
from
high
to
low
in
2022.
.SPX
mountain
2020-03-23
S
&
P
500
since
the
Covid
low
This
is,
of
course,
an
idealized
starting
point
from
which
to
measure
performance.
And
in
truth
the
34%
February-March
2020
black-swan
dive
was
so
sudden
and
so
quickly
reversed
that
not
all
that
many
investors
locked
in
those
prices.
While
the
S
&
P
500
bottomed
at
around
a
three-year
low
under
2,200,
the
index
spent
only
a
few
weeks
under
2,500.
How
much
is
left?
Still,
the
vertical
distance
traveled
since
then
—
not
to
mention
the
27%
surge
since
late
October
without
so
much
as
a
2%
wobble
along
the
way
—
has
even
optimistic
investors
checking
the
imaginary
market
fuel
gauge
for
an
idea
of
how
much
is
left
in
the
figurative
tank.
While
it’s
more
a
notable
tidbit
than
a
prophesy,
the
25%
annualized
return
of
the
past
four
years
quite
closely
resembles
the
four-year
pace
of
gains
the
S
&
P
500
logged
off
the
March
2009
global
financial
crisis
bottom,
and
the
August
1982
kickoff
to
the
great
’80s-’90s
golden
era
for
stocks.
Those
were
both
generational
bottoms
from
levels
first
seen
more
than
a
decade
earlier,
of
course,
while
the
2020
low
was
more
a
brief,
ugly
blip
in
an
ongoing
bull
market.
Still,
after
the
fourth
year
from
the
bottom,
those
earlier
rallies
somewhat
slowed
but
kept
chugging
for
a
while.
Stretching
the
tape
measure
only
back
to
the
October
2022
low,
which
was
set
during
the
inflation
surge
and
Federal
Reserve’s
tightening
counteroffensive,
the
current
rally
is
decidedly
unremarkable
compared
to
the
average
path
of
the
past
11
bull
cycles,
with
the
typical
path
forward
a
less-steep
climb,
as
HSBC
shows
with
this
chart.
In
several
specific
ways,
the
market
behavior
is
also
not
displaying
the
hallmarks
of
nearing
a
decisive,
lasting
market
peak.
A
four-month,
25%
gain
in
the
benchmark
–
sealed
at
the
end
of
February
–
is
overwhelmingly
associated
with
further
gains,
as
is
a
5%-or-better
S
&
P
500
gain
in
the
first
quarter
of
the
year.
Last
Thursday
saw
the
greatest
number
of
S
&
P
500
stocks
hitting
a
52-week
high
in
three
years,
and
Renaissance
Macro
notes
that
“rarely
do
we
see
a
market
peak
with
a
coincidental
peak
in
52-week
highs.”
Similarly,
Bespoke
Investment
Group
counts
seven
prior
times
the
index
has
gone
at
least
100
days
without
a
2%
setback,
and
it
was
higher
six
months
later
each
time,
for
gains
between
1.7%
and
15.8%.
More
qualitatively,
it’s
a
bull
market,
and
in
a
bull
market
the
overshoots
occur
to
the
upside,
so
a
rally
being
“ahead
of
itself”
is
not
fatal.
Note,
too,
that
there
have
been
two
cyclical
bear
markets
in
the
past
four
years
–
more
than
the
typical
frequency.
And
the
S
&
P
500
is
only
9%
higher
than
it
was
more
than
two
years
ago,
hardly
reaching
escape
velocity
from
planet
Sanity.
As
if
answering
investors’
constant
complain
last
year,
the
market
has
broadened
out
quite
a
bit,
with
industrials,
homebuilders,
even
energy
and
basic
materials
showing
life.
To
substantiate
this
action,
earnings
growth
will
need
to
become
more
general
as
well.
There
is
at
least
the
potential
for
fundamental
catch-up:
Warren
Pies
of
3Fourteen
Research
points
out
that
only
37%
of
S
&
P
500
stocks
have
their
earnings
level
at
a
two-year
high.
Another
thing
about
bull
markets:
It’s
not
only
the
cleverest
investors
or
the
traders
“with
an
edge”
who
make
money.
It’s
everyone
who
simply
holds
on.
This
point
can
be
hard
to
keep
in
mind
when
observing
that
the
“don’t
overthink
it”
crowd
is
happily
fully
invested
due
to
the
widely
acknowledged
positive
news
flow.
We
have
an
economy
that
keeps
surprising
with
its
resilience,
an
ongoing
revival
of
corporate
earnings
growth,
flush
credit
markets,
benign
Treasury
yields,
global
equity
indexes
confirming
U.S.
strength
with
their
own
record
highs,
a
frenzied
AI
buildout
and
a
Fed
looking
for
an
opening
to
ease
policy
into
this
bounty
of
blessings.
There
may
not
be
much
of
a
wall
of
worry
for
the
market
to
climb
compared
to
six
months
ago,
but
for
now
good
news
is
doing
the
trick.
Last
week,
the
known
catalysts
were
Nvidia’s
developers’
conference/revival
meeting,
the
Bank
of
Japan
exiting
a
negative-interest-rate
regime
and
a
Fed
meeting
that
updated
the
committee’s
outlook
on
the
economy
and
rates.
All
three
flashed
green
in
sequence
like
traffic
lights
on
a
traffic-free
avenue.
Turbulence
ahead?
Which
is
not
to
say
that
things
will
stay
this
easy,
or
that
the
market
hasn’t
already
taken
credit
for
some
wins
in
games
not
yet
played.
The
most
conspicuous
causes
for
caution
are
not
imminent
storms
but
more
atmospheric
conditions
that
can
sometimes
cause
turbulence.
The
strongest
six
months
of
the
year
for
stocks
is
about
to
end,
valuations
are
elevated
and
–
depending
on
how
it’s
measured
and
deciphered
–
investor
sentiment
is
trending
toward
overconfidence.
Ned
Davis
Research
chief
global
strategist
Tim
Hayes
on
Friday
handicapped
what
might
warn
of
a
market
stumble,
using
the
firm’s
array
of
cyclical,
sentiment
and
technical
models:
“As
long
as
rate
cuts
remain
a
high
probability,
the
cyclical
bull
should
persist,
though
not
without
some
volatility
ahead.
With
optimism
excessive
and
the
seasonal
and
cyclical
tailwinds
fading,
keep
an
eye
on
the
breadth,
leadership
[and
index]
concentration
…for
signs
that
a
downturn
is
underway,
most
likely
a
correction
that
will
relieve
the
optimism
and
set
the
stage
for
the
bull
market
to
resume.”
Rate
cuts
remaining
a
probability
isn’t
the
same
as
rate
cuts
needing
to
happen
soon
or
to
be
particularly
deep.
Markets
do
quite
well
during
prolonged
pauses
between
Fed
tightening
and
easing,
and
slower,
more
measured
rate-cutting
cycles
have
tended
to
be
better
(think
1995)
than
aggressive
ones
in
which
policy
makers
are
rushing
to
aid
an
ailing
economy.
The
sentiment
question
is
nuanced.
No
doubt
bullishness
has
become
more
the
consensus
stance,
but
this
isn’t
unusual
or
alarming
in
a
bull
market
on
its
own.
Rocky
White,
quantitative
analyst
at
Schaeffer’s
Investment
Research,
last
week
noted
the
long-tenured
Investors
Intelligence
survey
of
market
advisory
services
registered
bulls
surpassing
60%,
good
for
the
95
th
percentile
of
optimism
dating
to
1971.
Forward
returns
from
such
levels
in
the
past
were
somewhat
below
average,
with
heightened
risk
if
a
near-term
pullback,
but
over
the
following
year
stocks
were
still
higher
more
than
two-thirds
of
the
time.
The
Bank
of
America
global
fund
manager
survey
likewise
showed
investment
professionals
warming
to
risk.
But
a
composite
sentiment
measure
that
blends
managers
economic-growth
expectations,
cash
holdings
and
equity
exposure
is
up
sharply,
but
only
to
about
neutral
levels.
When
not
operating
in
hindsight
mode,
the
market
setup
always
tends
to
look
tricky.
The
weight
if
the
evidence
argues
against
an
imminent
major
market
peak,
but
that
doesn’t
guarantee
a
smooth
and
painless
ride
indefinitely.
The
market
doesn’t
owe
investors
much
or
anything
give
recent
performance
and
valuations.
And
just
because
it’s
a
cliché
to
point
out
election
years
tend
to
spur
volatility
before
summer
is
out
doesn’t
make
it
untrue.
Sounds
like
it
makes
sense
to
stay
involved
and
keep
expectations
in
check,
as
ever.
