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Market Highs Are Bullish, Not Bearish

Posted By Barry Ritholtz On March 5, 2014 @ 8:30 am In Investing,Markets,Technical Analysis | Comments Disabled

With the reduction of tensions on the Black Sea, global markets [1] rallied yesterday to multi-year highs. In the U.S., the S&P 500 closed at an all time high of 1873.91. Other markets set new multi-year or all-time highs as well. The world is breaking out.

The day’s trades had barely closed, when the Johnny one-notes began their usual litany of complaints. The market is long in the tooth, we are told; the bull cycle is Fed-driven, it’s temporary, its “toppy.” [2]

Then there is my favorite complaint: All time highs are dangerous, a sign of a market that has gone too far. (Subtext: Get out now!)

Unless you can be bothered to look at the actual numbers: If you were willing to actually consider the quantitative data about highs, you might reach a somewhat different conclusion. In point of fact, one of the most bullish things that can happen to any market is for it to reach new multi-year highs. Continues here [3]


All time high by year [4]

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URL to article: http://www.ritholtz.com/blog/2014/03/market-highs-are-bullish-not-bearish/

URLs in this post:

[1] global markets: http://www.bloomberg.com/news/2014-03-05/u-s-stock-index-futures-are-little-changed-before-adp.html

[2] “toppy.”: http://www.insidefutures.com/article/1171432/E-Mini%20S&P%20500:%20%20%20Return%20to%20the%20rally%20after%20Russia%20recedes%21.html

[3] Continues here: http://www.bloombergview.com/articles/2014-03-05/no-market-highs-are-not-a-bad-sign

[4] All time high by year: http://www.ritholtz.com/blog/wp-content/uploads/2014/03/All-time-high-by-year.xlsx

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