zeelotes
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Introduction
This study seeks to find when major bull markets have begun over the past forty years -- I went as far back as 1966 since that is when I have data for the NYSE and I wanted all the data to match. The thought behind this study is that if we know when major bull markets begin, we can invest a bit more aggressively from those dates.
Bull Markets Defined
For the purposes of this test, I look for periods when the underlying index has risen by greater than 20% without a drop of more than 20%. By using this approach I find the major peaks and troughs in the market. I also require that the rise had to endure for more than 40 consecutive weeks to be considered a bull market. Believe it or not, there are times that the market rises by greater than 20% just to go on to fall again almost immediately. A good example of this is the rise from 9/21/2001 on the S&P 500 -- it rose 21.40% in fifteen weeks only to go on to fall again in one of the biggest bear markets we've seen in the past century.
So, we have two requirements:
1.) The market must rise by more than 20%
2.) The rise must endure longer than 40 weeks (about 75% of a year)
Major Bull Markets in the NYSE
This first bit of data starts with the NYSE. There have only been eight times when the market has risen by more than 20% in this index. Of these eight, all but one fits within our definition of a bull market. The only exception is the rise from 9/21/2001 where it rose 20.89% over 26 weeks. The question now becomes: When did these bull markets begin?
Six of the seven took place in year two of the Presidential Cycle -- four of the seven began from a low set in October. As we can see here, 86% of the major bull markets of the last forty years began in year two of the Presidential Cycle.
Major Bull Markets in the S&P 500
Since the S&P 500 is one of the most tracked indexes in the world, the next study is based on this index. Once again, in order to match the NYSE, I only go back to 1966. In this case there have been ten times when the market rose more than 20%. Two of those ten took place in 2001 -- one from 3/22/2001 and the other from 9/21/2001. In both cases, the market when on to fall within a very short period of time since the market was still fully within the clutches of the bear. In the first case it only took nine weeks before the peak was reached, but in the second, it lasted a bit longer at 26 weeks.
Once again, of the six times that fall within our definition of a bull market, there is only one occurrence that fell outside of year two of the presidential cycle -- and that was in 1987.
Let me throw in the Dow for good measure:
Bull markets have historically begun in year two of the presidential year, and often, within October of that year.
But what happens if we lower the bar a bit from 20% to 15% -- in other words, we keep the second part of our definition the same requiring a 40 week rise, but we change the amount of rise required to 15%. Let's see what happens in this case.
Major Bull Markets in the NYSE Using a 15% Rise
Let me give you all the data first, and then I'll make some observations.
Of the thirteen times when the market rose more than 15% on the NYSE, four are disqualified due to the brevity of their time in bull mode. Those are the ones I've listed at the bottom. The ones in the top part of the table fall within our definition of a bull market -- after revising the rise from 20% to 15%. Of the nine that qualify, only one falls outside of year two of the cycle -- 1987 once again. You'll note the dates -- 1966, 1970, 1974, 1978, 1982, ##, 1990, ##, 1998, and 2002. Of the ten in the cycle -- only two did not register as the beginning of a bull market. From 1966 to 2005 bull markets have begun in year two all but two of the ten times. Statistically significant? You decide.
Major Bull Markets in the S&P 500 Using a 15% Rise
This is the same as above but applied to the S&P 500. As you can imagine the results are similar, if not the same.
Of the thirteen times when the S&P 500 has risen by more than 15%, four are disqualified due to the length of time that it rose. Once again, the other nine all fall within year two except for 1987. Half of the eight land in October of year two -- in fact, the one in 1998 that landed in August I'd consider an error anyway, since if I change to using the low price, rather than the close price, the trough lands on 10/8/1998.
When Do Bull Markets Begin?
At least for me -- the question is answered. How about you?
Note: This is my first post on this board. I'm not sure if I'm posting in the correct place, so feel free to correct me if I'm not.
This study seeks to find when major bull markets have begun over the past forty years -- I went as far back as 1966 since that is when I have data for the NYSE and I wanted all the data to match. The thought behind this study is that if we know when major bull markets begin, we can invest a bit more aggressively from those dates.
Bull Markets Defined
For the purposes of this test, I look for periods when the underlying index has risen by greater than 20% without a drop of more than 20%. By using this approach I find the major peaks and troughs in the market. I also require that the rise had to endure for more than 40 consecutive weeks to be considered a bull market. Believe it or not, there are times that the market rises by greater than 20% just to go on to fall again almost immediately. A good example of this is the rise from 9/21/2001 on the S&P 500 -- it rose 21.40% in fifteen weeks only to go on to fall again in one of the biggest bear markets we've seen in the past century.
So, we have two requirements:
1.) The market must rise by more than 20%
2.) The rise must endure longer than 40 weeks (about 75% of a year)
Major Bull Markets in the NYSE
This first bit of data starts with the NYSE. There have only been eight times when the market has risen by more than 20% in this index. Of these eight, all but one fits within our definition of a bull market. The only exception is the rise from 9/21/2001 where it rose 20.89% over 26 weeks. The question now becomes: When did these bull markets begin?
Six of the seven took place in year two of the Presidential Cycle -- four of the seven began from a low set in October. As we can see here, 86% of the major bull markets of the last forty years began in year two of the Presidential Cycle.
Major Bull Markets in the S&P 500
Since the S&P 500 is one of the most tracked indexes in the world, the next study is based on this index. Once again, in order to match the NYSE, I only go back to 1966. In this case there have been ten times when the market rose more than 20%. Two of those ten took place in 2001 -- one from 3/22/2001 and the other from 9/21/2001. In both cases, the market when on to fall within a very short period of time since the market was still fully within the clutches of the bear. In the first case it only took nine weeks before the peak was reached, but in the second, it lasted a bit longer at 26 weeks.
Once again, of the six times that fall within our definition of a bull market, there is only one occurrence that fell outside of year two of the presidential cycle -- and that was in 1987.
Let me throw in the Dow for good measure:
Bull markets have historically begun in year two of the presidential year, and often, within October of that year.
But what happens if we lower the bar a bit from 20% to 15% -- in other words, we keep the second part of our definition the same requiring a 40 week rise, but we change the amount of rise required to 15%. Let's see what happens in this case.
Major Bull Markets in the NYSE Using a 15% Rise
Let me give you all the data first, and then I'll make some observations.
Of the thirteen times when the market rose more than 15% on the NYSE, four are disqualified due to the brevity of their time in bull mode. Those are the ones I've listed at the bottom. The ones in the top part of the table fall within our definition of a bull market -- after revising the rise from 20% to 15%. Of the nine that qualify, only one falls outside of year two of the cycle -- 1987 once again. You'll note the dates -- 1966, 1970, 1974, 1978, 1982, ##, 1990, ##, 1998, and 2002. Of the ten in the cycle -- only two did not register as the beginning of a bull market. From 1966 to 2005 bull markets have begun in year two all but two of the ten times. Statistically significant? You decide.
Major Bull Markets in the S&P 500 Using a 15% Rise
This is the same as above but applied to the S&P 500. As you can imagine the results are similar, if not the same.
Of the thirteen times when the S&P 500 has risen by more than 15%, four are disqualified due to the length of time that it rose. Once again, the other nine all fall within year two except for 1987. Half of the eight land in October of year two -- in fact, the one in 1998 that landed in August I'd consider an error anyway, since if I change to using the low price, rather than the close price, the trough lands on 10/8/1998.
When Do Bull Markets Begin?
At least for me -- the question is answered. How about you?
Note: This is my first post on this board. I'm not sure if I'm posting in the correct place, so feel free to correct me if I'm not.
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