‘Bernanke’s Market’ is one way to describe the recent price gyrations. Perhaps that’s not fair or accurate. Yet his initial statement of possible Fed restraining its bond purchases, set near record prices back. Then after yesterday’s opposite opinion, the market shot higher.
It’s easy to understand Bernanke’s original caution: prices were soaring to all-time highs. Though the declines following that Fed view seemed quite moderate, they seemingly led to Bernanke’s reversal.
Today’s increases are the sixth advance in as many days for the NASDAQ and the S&P500. It is the third repeat of a six-day positive streak over the last three bull markets. More significant, as the diagram shows, all three occurred in this expansion, since 2009.
The DJIA and the S&P500 have never closed this high; they are at 109 and 107 percent above their all-time peaks of October 2007. The NASDAQ, now at 128 percent of that high, has recovered 72 percent of its all-time, go-go years apex.
Wary investors view this as a delicate time: do these facts signal opportunity or peril? This bull market is now at day 1,091; the 2000 expansion topped out after 1,059 days, while it took 1,154 trading days for prices to hit their October 2007 maximum.
Nor does the record of six advances in a row provide definitive guidance – for declines followed all three occasions. Then, before long, the market took off to higher levels first, for the next twelve months, and then after a pause, to today’s record highs.
DJIA 1.11 percent
NASDAQ 1.63 percent
S&P500 1.36 percent
