The US stock markets have rallied significantly since Fed Chairman Jerome Powell announced in January that the central bank had put its interest rate hiking campaign on hold indefinitely. As you can see below, the S&P 500 Index went virtually straight up from January to April. After falling below 2,750 briefly in May, the Index has since rallied back and closed at a new record high today at 2,955.8.

The S&P, the Dow and Nasdaq have reached the current level twice before, and both times they failed to make new highs. Should the Dow and Nasdaq fail to make new highs on the current run up – and thus pull back the S&P 500 — that will be a significant negative indication – a “triple top” formation – which often (not always) signals the end of a trend.

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S&P 500 Index – Weekly

While the S&P 500 notched a new record high today, the Dow and the Nasdaq have not yet reached new all-time highs. We’ll need to watch them closely over the next few days to see if they also go to new highs. If not, that would be troublesome.

In any event, this is the longest stock bull market in US history. It is now over 10 years old.

The S&P 500 hasn’t fallen by 20% or more from a previous high since March 2009. This bull market is about 3,750 days old, the longest in the S&P 500’s more than 90-year history. That’s twice as long as the average bull market, according to analysts at S&P Dow Jones Indices.

Since 2009, stocks have more than quintupled, including dividends. While this is the longest bull market on record, it is not the strongest in percentage terms, as you can see below:

The Running of the Bulls

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The current bull market is now the longest in US history. It had risen 327.4% through the end of last week (not including dividends).

In terms of strength, that makes it the second strongest bull market in history, behind the Oct. 1990 – Mar. 2000 bull market which rose by 417.0% (not including dividends).

The question is: When is this bull going to run out of gas? Obviously, no one knows but the one thing we can all agree on is that we are late in the cycle.

That raises a second question: How late is it? Again, no one knows. Market cycles often last for years, and major turning points can be few and far between, as is the case with this bull market.
Source: S&P Dow Jones Indices, Wall Street Journal

And that raises yet a third question: Should investors be doing anything to protect themselves since we are late in the cycle? That depends on what kind of investor you are — whether you are a strict “buy-and-hold” investor, or if you are willing to consider alternative investments that can move to cash (or short) when the next bear market unfolds.

If you are in the latter camp, I have a suggestion for you below. But before I get to that, let’s take a look at what the Fed had to say yesterday following its latest policy meeting.

Fed: Rates Unchanged For Now – Word “Patient” Removed

The Fed Open Market Committee (FOMC) concluded its latest policy meeting on Wednesday and, as I predicted, voted to leave the Fed Funds target range unchanged at 2.25-2.50%. The Committee did NOT vote for a rate cut, as so many investors and forecasters predicted. Fed Funds futures plunged after the announcement.

The only major change in the FOMC’s policy statement was the removal of the word “patient” with regard to upcoming changes in the Fed Funds target range. In its place, the FOMC added that it “will act as appropriate to sustain the expansion.”

While many investors and forecasters were disappointed that the Fed did not cut rates, I believe the new language just above means the Fed will at least consider a rate cut, and maybe more than one, later this year – IF the economy slows down significantly.

In that regard, our next significant indicator will be the first estimate of 2Q GDP near the end of July. Most expect it will come in lower than the 3.1% in the 1Q. The Atlanta Fed’s GDPNow estimate has recovered to 2.0% for the 2Q, up from 1.3% at the beginning of this month.

So, it will be interesting to see the Commerce Department’s advance 2Q GDP estimate in the last week of July. The next FOMC meeting is July 30-31. If that GDP estimate is 2% or better, I would not expect a rate cut at the July FOMC meeting.