Source: Jin10 Data

According to the data from Ned Davis Research, the recent bull market in the stock market may continue for a very long time.

The strategists from the research company indicate that this two-year-old bull market may continue for another 12 months. In a report this week, NDR stated that as long as three positive catalysts continue to boost the market, there is no reason for the stock market not to rise.

The company stated that in the 13 bull markets lasting at least two years since 1949, US stocks have continued to rise for a third consecutive year, unless the economy enters a downturn or faces a black swan event, such as the European sovereign debt crisis or the 2011 US credit downgrade.

One example is when the Fed reversed its rate cut decision, the bull market in the stock market ended, causing panic among investors.

The strategist wrote, 'Bull markets do not fade away with the passage of time. The table below emphasizes our view that in the absence of Fed policy errors, an economic hard landing, or external shocks, the continuation of the bull market is the path of least resistance.'

NDR pointed out that in all bull markets lasting at least three years since 1949, the median increase in US stocks in the third year is 13.1%.

Since October 2022 when the s&p 500 index entered the bull market zone, the index has risen by 60%. The company stated that these increases are mainly attributed to the following three positive catalysts, indicating that as long as the positive factors continue to exist, the stock market can continue to perform well.

1. Anti-inflation trend: The company wrote that cooling inflation has "defined" the current bull market. Although progress in reducing inflation seemed stalled in the first half of this year, it has now been trending closer to the Fed's 2% inflation target, reaching 2.5% in August.

2. Avoiding economic recession: The US economy needs a soft landing to continue the stock market's strong performance. Strategists indicate that the risk of an economic recession "appears to be low in the short term." The US GDP grew strongly by 3% in the last quarter.

3. Strong corporate earnings: Firm profit growth is needed for US stocks to keep rising. According to FactSet's data, S&P 500 companies are estimated to have profit growth of about 4.6% in the third quarter. This analysis firm stated in a report that if this turns out to be true, it would mark the fifth consecutive quarter of profit growth.

NDR's strategist added: "We are still bullish on US stocks, both from an absolute perspective and relative to bonds and cash."

Editor / jayden