Ongoing Bull Market Shows Signs Of Being Among The Weakest On Record: Expert

The ongoing rally in stocks, which started in October 2022 and resulted in an over 30% peak rally in the S&P 500, is considered one of the weakest bull markets in history, states Ned Davis Research.

As Business Insider reported, the investment firm highlighted the rally as the third weakest commencement of a bull market since 1950.

Ned Davis of NDR stated that the market’s high valuations and the Federal Reserve’s ongoing monetary tightening policies have curbed the stock market’s potential upside.

Despite NDR’s overweight stance on stocks, particularly as we approach a favorable year-end seasonal bias, the firm emphasizes caution for investors.

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The firm cites internal signals of the stock market as indicators of the current bull rally’s weakness. These include a high price-to-sales ratio for the S&P 500, weak demand for stocks, a key breadth signal that has not appeared, a narrow rally led by mega-cap tech stocks, and the advance-decline line.

According to NDR, while the market remains overvalued, “valuations are not good short-term indicators, in the long run, value matters.”

The S&P 500’s year-to-date returns are flat, excluding the top eight mega-cap tech stocks, including Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), and Nvidia (NASDAQ:NVDA), among others.

The advance-decline line, another measure of stock market breadth, is at a new bear market low, leading Ned Davis to question the health of the current market.

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