We're almost one third of the way through Q4 of 2024. And what is historically a relatively volatile month, the market has so far been able to navigate these seas with ease - up 2.73% this month on the S&P 500.
With so much to be bearish about (as there always is), investors are scratching their heads as to where to from here. I spoke about this last week on Ausbiz. What a cracking year it has been, surely it can't keep going, right? Well, let's take a look and how it's all played out before.
2024 has seen 31 All Time Highs (ATHs) in 2024, which puts it as the 6th highest number for H1 since daily data starts in 1928. Deutsche Bank shares this great chart.
In the top 10 years, the average number of all-time highs (ATHs) in the first half of the year (H1) has been 33. For the second half (H2), this group typically experienced an average of 19 more ATHs, with an average price move of +5% and a median of +10%. Interestingly, only two of these top ten H1 ATH years saw a negative price move in H2: 1987 (-19%) and 1983 (-2%). Notably, 1983 was the only year in this group to record fewer than 10 ATHs in H2, with just one. In contrast, 1987 saw 14 additional ATHs before the infamous October crash.
As for 2024, it’s on track to rank 14th in terms of H1 index increases over the past 97 years. However, history reminds us to be cautious – the top 5 years all posted negative H2 performances.
Last week, over 20% of the index's components traded at a new 52-week high while no stocks traded at a 52-week low. As shown below, that is the strongest net percentage of stocks hitting 52-week highs in a single day since March 21st when the reading was only marginally higher at 22.86%. Before that, May of 2021 was the last higher reading when the net percentage of stocks hitting 52-week highs eclipsed a record, since 1990 at least, of 44%. Bespoke put this great chart together.
Source: Bespoke
A high percentage of stocks hitting 52-week highs is typically considered a bullish signal which indicates strong momentum. It has been common for these readings to be seen in the context of long-term uptrends. The chart below shows the S&P 500 since 1990 (log scale) with a yellow dot for each time net new highs exceeded 20% (red dots indicate the first instance in at least six months).
Source: Bespoke
After a strong H1, history indicates we're in for a strong finish to the year. There are no guarantees of course. The market can knock you out cold with one blow. But for now, and with only weeks remaining for 2024, if you look under the market's hood, things look positive. This is what bull markets are made of.
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