EC Best Year Since 2013 – What’s Next?


Traders work at the New York Stock Exchange (NYSE)(Photo by JOHANNES EISELE/AFP via Getty Images) AFP VIA GETTY IMAGES

With Friday's slight correction, it's looking like shoppers may have taken some profits on Friday and used them to shop. Although we don’t have final Black Friday data available yet, the early reports indicate that “online sales on Thanksgiving Day were up 20% from a year ago”.

Some of last week’s enthusiasm for stocks was based on more positive comments regarding the US-China trade deal, even though the signing of the Hong Kong Human Rights and Democracy Act by President Trump dampened the optimism heading into this weekend.



It was a solid month for the stock market, as the Nasdaq 100 was up 4.0%, followed by a gain of 3.7% in the Dow Industrials and 3.4% for the S&P 500. The table above also has the YTD performance of the major averages. As of Friday’s close, the S&P 500 is up 25.3%. Even if the S&P 500 were to close unchanged in December 2019 would be the 2nd best year in the bull market since 2013, when it was up 29.6%.

S&P 500 Yearly


Some may be surprised to learn that, since 1996, there have only been six years when the S&P 500 closed lower. In 2008, it was down 38.5%. The S&P 500 was lower for three years in a row from 2000-2002, with losses respectively of 10.1%, 13%, and 23.4%. That was a rare occurrence, as three years of consecutive losses had not happened since 1939-1941.

The S&P 500 had impressive gains ranging from 19.5% to 34.1% in the five years leading up to 2000. The bull market performance of the late 1990s was much stronger than what we have seen since the market’s bottom in 2009.

So, what does this performance mean for 2020? In 2014, after a very strong 2013, the S&P 500 gained 11.4% before closing down 0.73% in 2015. However, in my view, the status of the advance/decline analysis is more important than the prior year’s pattern. In the spring of 2015, the weekly advance/decline started to diverge from prices, which set the stage for the sharp market declines in August 2015 and early 2016.

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