Mark Hulbert on the Implications of Stock Market Making New Highs
Mark Hulbert, editor of the Hulbert Financial Digest, was interviewed by CNBC’s Carl Quintanilla regarding the implications if the Dow breaches its record high of 14,164.
Citing 70 years of data from Ned Davis Research, Hulbert said their analysis of 13 instances where the stock market reached a new high following a bear market revealed the market, on average, rose for another year. Hulbert cautioned there was a wide variability in the data so investors shouldn’t take too much solace from those statistics.
The shortest period of time the market rose following a new high from a bear market was in 2007, Hulbert said. The market hit a new high in May 2007 and rose 2 percent to its ultimate high in October 2007, he added.
Hulbert warned that sentiment was perhaps a greater source of worry. The couple hundred advisors he tracks are excessively bullish, he said. A new high might bring in the few remaining skeptics and create a “last gasp of euphoria” observed at market tops, Hulbert added.
Hulbert admitted the sample size of 13 new highs instances was small, but the market has never “rolled over and died” after hitting a new high following a bear market. However, investors shouldn’t put all their money in the market based on this fact, he concluded.
SMA Comment: The broader based Wilshire 5000 index, basically the total U. S. stock market, actually hit an all-time high on January 24th.
Back in the middle of December, Hulbert warned that insiders were selling stock [link].