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Secular Bull and Bear Markets

With key US market indexes at or near all-time highs, there is a heated debate as to whether the March 2009 low was the end of a bear market and the start of the next structural bull market. Many market pundits will continue to call the current stock market environment as a secular bear, while many others will claim that it is as a secular bull. Too often, the concept of secular bull and secular bear cycles is misunderstood by investors and even dismissed. This is probably due to the incorrect and even contradictory information about these long-term cycles.

First impressions are important and as such investors need to better understand these longer-term cycles. Keeping in mind that secular stock market cycles are distinct from the intermediate-to-short-term cyclical trends that often can occur numerous times within one secular trend.

Market historians often study the past to better understand historical trends and market performance. These long-term historical trends are depicted on the charts as structural or secular uptrends, sideway trends, and downtrends. Long-term structural trends are often referred to as a secular bull or a secular bear. Some believe the term secular comes from the Latin word “Saeulum” for a long period of time. This is in sharp contrast to the Latin word “Aeternus” for eternal/everlasting.

Like historians, technicians also study the secular trends of major markets predominately to help us gain insights into future trends but most importantly to avoid repeating the mistakes in the future. Mark Twain is reputed to have said – “history doesn’t repeat itself, but it often rhymes.” A successful investor should have only one common goal – capture most of the good times (secular bull periods), and try to miss most of the bad times (secular bear periods).

With the above thoughts in mind, we will briefly summarize the US stock market (SPX) secular trends and patterns since the turn of the century. It appears the SPX Index has an uncanny ability to consistently alternate between periods of secular bull trends followed by periods of secular bear trends. These alternating long-term trends have repeated without missing a single beat over the past 100-plus years. It is also interesting to note that within these long-term secular trends which can span from 8 to 20 years there can be cyclical countertrends that may be exciting (sharp rallies) and maybe also unnerving (sharp declines).

In summary, successful and astute investors will always respect the primary and prevailing secular trends in the stock market never trading against the dominant long-term trends. In a secular bear market, there may be one or more cyclical bull rallies. However, these rallies are often bull traps and will likely fade as the secular bear trend will reassert itself. In a secular bull market, there will also be one or more cyclical bear declines, but these are corrective phases as the primary trend will resume leading to the continuation of the secular bull rally.

So, the pertinent question remains – is the recent Feb-Mar 2020 market sell-off considered a cyclical bear decline within the confines of a secular bull trend that started in earnest in 2013? Most important, is the May 2013 SPX 13-year technical base breakout above 1,576.09 the start of a secular bull market? If the May 2013 secular bull is the prevailing and dominant long-term trend then this would imply the SPX bull rally can extend for another 1-year (2021) and possibly for another 13-years (2033) under the best-case scenario.

1906-1921 Structural Bear (15-years) – World World I

1921-1929 Structural Bull (8-years) – Roaring Twenties

1929-1949 Structural Bear (20-years) – Great Depression/World World II

1949-1965 Structural Bull (16-years) – Post World War II

1966-1982 Structural Bear/Trading Range (16-years) – Nifty-Fifty and Stagflation

1982-2000 Structural Bull (18-years) – Tech/Telecom Revolution

March 2000-April 2013 Structural Bear/Trading Range (13-years) – Tech/Telecom Bubble and Global Financial Crisis/Global Recession

May 2013-present Structural Bull (7-years so far)?

Source: Courtesy of

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