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  • Writer's pictureJohn Pickart

Strong Trend and Recovery

Stock market trend and momentum have been strong since 2020 lows. Not only has the S&P 500 reached new highs but the index level is well above the 200-day simple moving average.

The chart highlights the recovery of the S&P 500 and its 200-day average and also the sustained advance from the lows following the financial crisis in 08/09. The S&P 500 is 15% above the 200-day line, high but not out of the ordinary (orange). What is unusual is the quick recovery of the market.

During the Dot-com period, the S&P 500 fell 49% from the March 2000 high to the low in October 2002. The recovery to a new high occurred in May 2007, over seven years after the previous high. The Global Financial Crisis period was similar; the high in October 2007 was not reached again until March 2013, nearly five and a half years later.

The S&P 500 peaked on February 19 of last year and bottomed barely a month later on March 23. Fed actions and comments plus fiscal measures quickly stabilized the market and helped it reach a new high on August 18. As of yesterday, April 21st, the S&P 500 is up 86.5% from the low last year, only 13 months ago. Returns from lows to new highs following the Dot-com period and GFC were 97.0% and 131.9%, respectively. More to ponder.

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