Retirement Weekly

What the S&P 500’s new bull market tells us about what’s to come

The S&P 500 has now closed more than 20% its October low

Should we feel bullish now?

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Was that the all-clear signal? Should you now reinvest in equities the cash you’ve built up in your retirement portfolio over the last 18 months?

I ask because on Thursday of this week the S&P 500 SPX, +0.11% closed more than 20% above its bear-market low from last October. Crossing this much-anticipated 20% threshold is considered by many the criterion for what constitutes a bull market.

Read: S&P 500 exits longest bear market since 1948. What stock-market history says about what happens next.

Unfortunately, the market gaining 20% does not automatically mean that happy days are here again. The 20% threshold instead is something that analysts and commentators have invented to help them tell stories about the market. In many ways the attention being paid to it this week is a lot of sound and fury signifying nothing.

One curious aspect of the story telling is that, now that the 20% threshold has been eclipsed, analysts will retroactively declare that the bull market actually began last October. The exact day of the closing low was Oct. 12, when the S&P 500 closed at its lowest level of the bear market that began at the beginning of 2022. (See accompanying chart.)

This new narrative doesn’t change how your portfolio actually performed since then, needless to say. But perhaps because you now are being told the bull market is nearly eight months old, you will feel more upbeat?

Regardless of how you may now feel, the $64,000 question is whether eclipsing the 20% threshold provides an assurance not only that we have been in a bull market for the last eight months, but also that it will continue. The answer is “no.”

To find out, I focused on the three dozen bull markets since 1900 in the calendar maintained by Ned Davis Research. For each, I measured how much longer the bull market lasted after first eclipsing the 20% threshold, and how much more it gained. I found that in some cases the bull market was nearly over when it eclipsed that threshold. In one case, in fact, the bull market lasted just seven more calendar days; in another, the DJIA gained just 1.9% above and beyond its initial 20%.

Buy the rumor, sell the news?

Another telling statistic: Six of the bull markets in the Ned Davis calendar didn’t even last as long as the eight months that is the current bull market’s age. So it wouldn’t break historical precedent for the bull market that evidently now exists to be close to ending—just as it eclipses the 20% threshold. If so, it would be a classic illustration of the Wall Street advice to “buy the rumor, sell the news.”

Adding weight to this possibility is the exuberance that now exists among short-term stock market timers. I wrote about market timer sentiment a week ago, you may recall, reporting that the timers on balance were not yet so extremely bullish as to trigger a contrarian sell signal. That has now changed. The average recommended equity exposure level among short-term stock market timers (as measured by my Hulbert Stock Newsletter Sentiment Index, or HSNSI) is now higher than 97.6% of all other daily readings since 2000. That’s well inside the zone of extreme bullishness that previously signaled tough times ahead.

The bottom line? The market’s crossing the 20% threshold tells us little about the future. It may be, as sometimes was the case historically, this bull market still has a lot longer to run and much further to rise. Or it may be that this bull market is close to its end.

Take your pick. There’s no assurance that crossing the 20% threshold means that happy days are here again.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at