- According to Fundstrat, the stock market’s October low likely marks the bottom of the bear market.
- This is because 50% of bear markets since 1950 bottomed out in October.
- “Is it really an exaggeration to think the market has bottomed out? [on] October 12th? History suggests it makes sense,” Fundstrat said.
As the stock market continues its rally in the face of disturbing news, it’s becoming more likely that it’s approaching its current bear market lows.
Fundstrat research analyst Matt Serminaro said: Highlights of the week The stock market is usually expected to bottom out in October.
Recall that the S&P 500 hit a cycle low of 3,491 on October 12th. Investors were worried about rising inflation and aggressive rate hikes by the Federal Reserve. According to Chelminaro, a mid-October low makes perfect sense.
“Since 1950, there have been 12 bear markets. Six of the 12, the market bottomed in October. Is it really an exaggeration to think the market bottomed?” [on] October 12, 2022? History would suggest it makes sense,” Cerminaro said.
March is the second most common month for stock market bottoms in a bear market, having occurred twice since 1950.
Also, according to Fundstrat, the fact that the stock has been rising in consecutive quarters portends the idea that the market has already bottomed out and is likely to rise further.
Fundstrat’s Tom Lee said in a note on Friday that “the past 50 years have not seen two consecutive quarters of a ‘bear market.’ and emphasized that it is on track to rise by more than 5% in the first quarter of 2023.
But just because the stock market hits cycle lows doesn’t mean new highs are on the horizon.
It’s been 310 trading days since the S&P 500 hit an all-time high. It’s his highest single-day record since the global financial crisis, but history suggests it could be much further.
After the S&P 500 hit all-time highs in late 2017, it took 1,368 trading days for the stock market to hit new highs in 2013. Grant Hawkridge data from AllStarChart. Prior to that, it took 1,799 trading days for the stock market to hit new all-time highs after the dot-com peak in 2000.
The S&P 500 needs to rise 18% from current levels to hit new all-time highs.