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The bull market that began one year ago is one of the weakest in U.S. history.
After comparing the current bull market with all others since 1900, you could even argue that the rally beginning in October 2022 was just a bear market rally. Such an argument would be particularly compelling in light of the U.S. stock market’s recent losses, with the Dow Jones Industrial Average
DJIA
declining in eight of its last 10 sessions.
The exact day on which the bull market began depends on which market average you use. Here I’m focusing on the Dow, since it extends back further than any other broad market index. Based on it, the bear market of 2022 bottomed out on Sep. 30, 2022 at 28,725.51. At the one-year anniversary of the rally that began then — at the end of September 2023 — the Dow was 16.6% higher.
Based on the bull market calendar maintained by Ned Davis Research, no bull market since 1900 that lasted at least a year gained less than that over its first 12 months. The average first-year gain for all bull markets that lasted at least a year was 38.9% — more than double the current bull market’s one-year return.
My focus only on bull markets lasting at least a year was on the generous assumption that the bull market which began on year ago is still alive. But it’s entirely possible that it came to an end on Aug. 1 of this year, at what so far is the Dow’s closing high for the rally. The Dow closed that day 24% higher than at the beginning of October 2022, when the current bull market started.
But even on the assumption the bull market ended then, we’d still have to recognize that it’s been relatively lackluster. The average bull market gain of the nine bull markets in the Ned Davis calendar that lasted less than a year is 55.7%, more than double the Dow’s gain through its Aug. 1 peak.
One possible comeback to my analysis might be that bull markets which are slow to gain momentum last longer, in contrast to those that are quick to ignite but then fizzle out. But there is only modest statistical support for this theory.
Take the 50% of bull markets since 1900 with the smallest first-year returns: Those bull markets on average lasted a total of 2.3 years, versus two years for the 50% of bull markets with the biggest first-year gains. This difference is not significant at the 95% confidence level that statisticians often use to determine if a pattern is genuine. The same conclusion applies when correlating a bull market’s first-year gain with its return from then until its end.
The bottom line: No matter how you slice and dice the data, the U.S. stock market has been exceptionally weak. It’s even unclear whether the bull market that began a year ago is still alive.
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 mark@hulbertratings.com
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