Markets have been on a record-breaking streak. This Thursday, the S&P 500, Dow, and Nasdaq were all trading above their all-time highs.
In the last two weeks (or ten trading days), markets have set new all-time closing highs an impressive five times.
But instead of celebrating, some commentators are now sounding the alarm. Markets have gone too high, too fast, they say. This is the peak, and a long fall is next.
But the key indicators that I watch (and history) say otherwise.
Now, it’s only natural to be worried. After all, every downturn can be traced back to a peak (talk about stating the obvious). And 32.2% of consumers are bearish on stocks right now.
That’s more than the 31.7% who are bullish.
But the facts suggest this string of highs is about to continue, at least until the end of the year.
Here are the three reasons why…
Even if you’ve never actually read Robert Louis Stevenson’s novel, The Strange Case of Dr. Jekyll and Mr. Hyde, you’ve likely heard of the famous character with two drastically different personalities.
In this tale about the duality of human nature, Stevenson tells of the respected and reputable Dr. Jekyll who, after drinking a serum of his own creation, transformed into the evil and uncaring Mr. Hyde in order to indulge in his darkest urges.
In his disguise as Mr. Hyde, the titular character is the exact opposite of his upstanding counterpart, Dr. Jekyll. Hyde performs unspeakable monstrosities – including assault and murder – but is able to avoid capture and prosecution by transforming back into the good Dr. Jekyll.
In the end, Dr. Jekyll’s serum grows less and less effective, causing him to lose control of his ability to control his metamorphosis. As a last resort, Jekyll resolves to “bring the life of that unhappy Henry Jekyll to an end.”
Now that October is past us, there is a seasonal trend that is bringing the market’s version of Mr. Hyde – with all of its volatility and diminished gains – to an end, and returning us to much more pleasant, profitable times.
Here’s what I mean…