Trader Kevin Lodewick, centere, and specialist John Parisi, right, work on the floor of the New York Stock Exchange, Wednesday, May 18, 2016.Richard Drew/The Associated Press
For one of the more persistent bull markets in history, the last year-plus has proven to be one long recess.
May 21, 2015 was the last time the S&P 500 index set a new record high close of 2130.82. The benchmark has spent the ensuing 383 calendar days failing to surpass that mark.
But it is now within a hair of claiming a new all-time closing high. An upward move of just 0.9 per cent would do it.
"Investors hate to chase a rally, but a new S&P 500 high after a long pause would be a bullish signal," Merrill Lynch said in a note.
That pause has featured two major selloffs from which the market has clawed its way back, but as yet not quite enough to advance on its previous best close.
Before the interruption, the closing bell announced new record highs with regularity. In 2013, 45 days ended on a new high mark. In 2014, 53 daily records were set.
The lack of new records is not itself a problem, but it's certainly a symptom of the bull market's lost momentum.
To revisit record territory would represent a symbolic victory for bullish investors.
Only 23 times in stock market history going back to 1929 has the S&P 500 index rang in a new high after such a long pause signal, Merrill Lynch said. And the trend after such a rare signal is distinctly positive. The 250-day average return afterward is 15.6 per cent, with the S&P 500 up 91 per cent of the time, the note said.
"The implications are very bullish and new highs should not be feared," the analysts said.
The latest advance of U.S. stocks has demonstrated resilience in the face of bad news, they added.
"This technical backdrop suggests a continued climb up a wall of worry. Many of these worries are known, feared and part of the daily market narrative."
Tim Shufelt