AAM Viewpoints — Not Ready to Give up on The G.O.A.T.

Something has to give…maybe not next week, next month or even next year. But, at some point the current bull market will come to an end. There is already conjecture as to what that conclusion might look like. Also, there is debate as to the duration of the current bull market. Some market pundits believe it dates back to the March 2020 lows hit amid the covid outbreak, while others cite a timeline further back to the postscript of the 2007–2008 financial crisis. I would argue that the mega bull market trend actually dates as far back as the beginning of the century following the momentous burst of the speculation bubble in technology in March 2000.

In my view, examining the duration of the bull market cycle is an important consideration in calculating its ultimate potential — and demise. For years the bull market has been in a steady and determined uptrend, with occasionally brief and relatively shallow setbacks along the way. The retreats — even those dramatic events mentioned above — have been met with formidable buying and have ultimately proven to be constructive and well-tempered corrections that have relieved the technical stresses of overbought conditions. There is a critical characteristic that sets this market apart from most others I have studied as it reaches its advanced stages: sector and theme participation is expanding rather than shrinking. While technology and industrials continue to maintain impressive leadership, other areas, such as health care and materials that had lagged, are reemerging as important participants in the market advance. And sentiment readings today indicate increasing buying conviction. Mainly for these reasons I believe this bull market is not in jeopardy of nearing an end point.

Recently, a highly regarded investor — Paul Tudor Jones — predicted that the bull market would not end without a massive buying spree. I voiced a generally similar sentiment in my May 2024 Viewpoints when I predicted this bull market could be a G.O.A.T.  In some ways, this forecast may already be “mission accomplished” with the many record-setting feats among the major indices this year alone. However, even with the market at all-time highs, there are negligible signs of buying exhaustion. On the contrary, the market’s durability and elasticity amid headwinds, such as tariffs and geopolitical tensions, have created sturdy price architecture among many stocks, sectors and themes that have established integral support levels at incrementally higher points. In short, as the market has climbed into uncharted territory, an attractive risk/reward ratio has been preserved. The underlying strengths of this market are depicted in the proliferation and repetition of textbook “cup and handle” formations in numerous stocks that historically imply durability and longevity.

Given the current technical landscape and my conviction that this unprecedented bullish cycle has been decades in the making, its completion is not likely to be a soft decay but rather bear camp capitulation that spurs an urgent buying climax. This would then check the final box in the anatomy of a bull market as set forth by the late Sir John Templeton: “euphoria.” It is my opinion that the amber light is not yet blinking, even with respect to elevated optimism and that this market has yet to reveal its best G.O.A.T. qualities.

CRN: 2025-1003-12902 R

 The opinions and views of this commentary are those of Peroni Portfolio Advisors and are not necessarily that of Advisors Asset Management.