Investors often benefit from bull runs, but concerns about their sustainability arise as they extend. Despite a lower close on Wednesday, the S&P 500 recently marked its third-highest level ever, with 13 record closes in 2024 following a strong 24% rally in 2023. Some investors are apprehensive about the market’s ability to continue without a pullback.
Ned Davis Research’s Pat Tschosik suggests that the S&P 500 could still climb higher. Comparing the current bull run of 344 market days to the historical average of 694 days since 1930, there’s potential for the index to be only halfway through its rally.
Others point to fundamental reasons supporting further market gains, including investor sentiment, consensus growth expectations, and stable economic indicators. Technical analysis and historical trends, such as strong returns during election years, also suggest ongoing strength for the rally.
Tschosik emphasizes the importance of charts, noting that when a company or index has surpassed 50% of its average length of days without a 20% correction and continues to make new highs, it often indicates a longer uptrend with upside potential.
Tschosik highlights the 19 S&P 500 component companies that have gone the longest without a 20% correction since October 2020. Travelers leads the pack with 992 days, followed by PepsiCo at 990 days, while Eli Lilly has had the shortest run at 834 days.
Notably, the list is dominated by companies in the insurance industry, with names like March & McLennan, Arthur J. Gallagher, Chubb, Globe Life, Everest Group, Arch Capital Group, and Hartford Financial Services Group.
However, it’s worth noting that all 19 companies on the list have experienced at least a 15% correction since 2020. Despite the tech sector’s prominence in recent years, only one tech name, International Business Machines, appears on the list, with an 836-day run.
Tschosik highlights International Business Machines’ (IBM) impressive run, noting that it’s the fourth-longest streak for the company, nearing its record 1,083-day run that ended in 2013. With IBM focusing on shedding non-core businesses to emphasize cloud and artificial intelligence, Tschosik suggests it could set a new record for consecutive days without a 20% correction.
Indeed, IBM’s stock recently reached an 11-year high, buoyed by its AI business. However, the Nasdaq Composite itself is still striving to reclaim its record high, hovering just below it as of Tuesday.
While no stocks or indexes climb indefinitely, history demonstrates that even significant corrections are eventually surpassed by new gains. Nonetheless, some winning streaks persist longer than others.