We’ve come pretty close to the current bull market being over, but we’re not there yet despite all the panic we’ve seen lately. What we’re really seeing right now is a tepid market—it’s neither hot nor cold. Based on the technical definitions, we’re still in a bull market though and have been for the last seven days, says Gluskin Sheff Chief Economist David Rosenberg.
Bull market or bear market?
In a note on Wednesday, he explained what it takes for a bull market to occur and what must happen in order for a bear market to begin. Despite the broad selloff recently and the extreme volatility in the U.S. stock market, we haven’t drifted into a bear market because in order for that, he says we need a “20% sustained pullback.” However, a bull market requires a new high, which he notes hasn’t happened since May 21, 2015.
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He also pointed out that Wednesday was the seventh birthday of the current bull market as March 8, 2009 was the last date “the major averages finally put in a conclusive bottom (always clear in hindsight) following the epic global financial collapse.”
It sure seems like 2009 is turning up a lot these days. That’s the last time we saw a quarterly earnings decline for the S&P 500, data from S&P Capital IQ shows. It’s also the same year we saw two consecutive quarterly earnings declines for the index. And I’ve seen plenty of other points made by other economists and analysts about major events that last happened in 2009.
How will we know when we’ve left the current bull market?
At any rate, Rosenberg says the broader market is not in a bear market yet although 212 stocks have fallen into one. He adds though that “the bull is no longer getting the better of the matador,” noting that we came very close from drifting into a bear market on Feb. 11 when the market declined 15% from the recent highs. Only time will tell if the bull market will continue, he notes, because as mentioned already, a new high is needed.