The Bull Market Has Just Been Refreshed: Where Does it Go from Here?

My colleagues at Pring Turner Capital recently sent out a note to clients entitled “The Pause that Refreshes” by way of putting the post July correction in perspective with the 2022-202? bull market. In this article we will first examine some of the indicators justifying that primary trend optimism. Second, use stock market history of the last 125-years to examine where the rally might go from here.

Evidence arguing for a second bull market up leg is being provided by economic, monetary and technical factors. Let’s start with the economy. History tells us that the equity market and the economy are closely related. Since the 1920s there have only been two occasions on which their paths diverged. The first occurred in the late 1920s, when the market refused to buckle to the 1926-7 recession but instead marched straight up to the 1929 peak.

The second was in 2001 when the economy emerged from a recession, but the stock market sold off because it was still in the process of unwinding the tech bubble. For equities to diverge from economic activity is therefore very much the exception rather than the rule.