'Act 2' of This Bull Market Is Just Getting Started
Editor's note: Don't bail on the bull market...
Stocks have been on a stellar run in 2024. Still, many investors are skeptical about how much longer this bullish run will last as we approach the new year.
But according to Vic Lederman, editorial director of our corporate affiliate Chaikin Analytics, stocks still have plenty of room to run higher.
In today's Masters Series, originally from the December 18 issue of the Chaikin PowerFeed e-letter, Vic explains why he's remaining bullish heading into 2025...
'Act 2' of This Bull Market Is Just Getting Started
Folks, do you feel that?
We're getting closer and closer to the end of the year. And that means we're on the cusp of closing one of the strongest years in the S&P 500 Index since the 1990s. The broad market is up a whopping 25% this year.
After the choppiness over the summer, tech stocks have regained their footing. The tech-heavy Nasdaq 100 Index is up around 30% in 2024.
Consumer spending is strong, too...
I must admit, I thought we might be in for a slow holiday season. Earlier this month, I explained this in detail after my own Black Friday shopping excursion.
But the numbers are in. Overall spending on Black Friday grew by roughly 3.4% year over year. The shopping holiday was a hit – especially online.
Put simply, the market has had a massive year. And I don't blame you if you're tempted to think that it's over.
But "Act 2" of this bull market looks like it's starting...
So, we all know this market is running hot. But you've probably also noticed that the U.S. Federal Reserve is bent on lowering rates right now. The Fed's recent 25-basis-point cut marks its third consecutive rate cut.
Folks, this is how we know Act 2 is here. Despite the incredibly hot year in the market, we haven't reached euphoria yet.
You might think we don't consider sentiment at Chaikin Analytics. After all, the market provides us with a mountain of hard data.
But Chaikin Analytics founder Marc Chaikin built sentiment measures into the Power Gauge itself. Estimate trends, analyst ratings, and short interest all measure how people "feel."
Here's an example of what the breakdown in the Experts category looks like in the Power Gauge for a stock...
When it comes to individual stocks, we're looking for "bullish" sentiment on these factors. But when we're talking about the broad market, things are a little different...
We know the market is running hot. But we also know that we're not at a euphoric peak.
The unemployment rate has ticked up to roughly 4.2%. And the Fed's bias toward rate cuts tells us that it's concerned about high rates choking the market.
We also find that consumers aren't overly jubilant, either. The University of Michigan's consumer sentiment survey reveals that consumers are simply feeling "middle of the road" right now.
Interestingly, consumer sentiment hit a peak in February 2020. And like you would expect, it cratered as the COVID-19 pandemic played out.
But it didn't bottom until June 2022. That's when the "tech wreck" that year made it seem like the market had finally given up.
Now, we're at a healthy midpoint. And that's exactly what we want to see heading into 2025.
It means that the bull market is ready for Act 2. But remember, the market is always on the move...
Act 2 of this bull market is just getting started.
Good investing,
Vic Lederman
Editor's note: This also dovetails perfectly with what Pete Carmasino – chief market strategist for Chaikin Analytics – sees ahead for the coming year... In a special presentation last week, Pete unveiled his broad outline for 2025.
He also discussed where he thinks the hottest stocks in the market are hiding. And that's not all. Pete also shared the name and ticker of two specific stocks. One is an "avoid at all costs" name... and the other is one that he recommends buying right away.
To get the full story on how Pete thinks this bull market will unfold, check out his special presentation right here...