It took nearly seven months, but the S&P 500 Index finally closed at a new all-time high on Friday. Many clues along the way suggested new highs could eventually come, like strong overall market breadth and excellent earnings growth. Still, the big question now is, what happens next?

“Investors have been patiently waiting for new highs in the S&P 500, even while small caps and technology have been making new highs for months now. Here’s the good news: When the S&P 500 has gone at least six months without a new high, the index has been higher a year after the next new high in 17 out of the past 18 instances, going back to 1950,” explained Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, long waits between new highs tend to foreshadow strong outperformance in the subsequent year.

A Long Time Without New Highs Has Bulls Smiling

Could Friday’s new high be another sign that the bull market is alive and well? It very well could be. Two big reasons we see continued equity strength and an extension of this economic cycle are strong earnings and an accommodative Federal Reserve (Fed). Later today in our Weekly Market Commentary we take a look at second quarter earnings, and in our Weekly Economic Commentary we break down the Fed minutes from the most recent meeting and last week’s Fed Economic Policy Symposium in Jackson Hole. Be on the lookout for both.


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