By Harry dent
I have been talking recently about how this final recovery since the sharp drop of more than 20% at the end of December 2018 is very close to that from the end of October 1998 until the end of March 2000.
That correlation suggests that this upturn could last until the end of May or so, at the height of the normal annual seasonal cycle that says: "Sell in May and leave."
But wait. This is an election year and very disputed, with all the incentives for Donald take out all the stops to win: consumer tax cuts and incentives to invest in stocks near the top of the biggest bubble in modern history … Do you think it's rational?
The initial "J" of Donald's middle name can go from being "genius" (his term) to "jerk."
I showed in a recent article that the trajectory of this last purge at the end of December 2018 would be projected in a peak at the end of May this year. But most likely, it should last longer in this single election year with so many incentives for greater stimulus, from the repository crisis to the coronavirus.
This table shows the final recovery of each broader S&P 500 bull market without a 20% correction since 1949 after World War II WII. The bubble market of 1987-2000, which technically speaking began in October 1990, is more relevant in time and profit for this.
The final earnings range of the rally is from 29% to 68%. The average accident later was 42%. But, remember my words, this will be the best you see, and closer to 1929-32, between 70% and 90% after an unprecedented bubble.
If this last long rally is compared to the last technological bubble from October 1998 to March 2000, it would last another three to four months until the end of May until the end of June. The gains from here would be around 15% for the S&P 500 at around 3,900 and 20% + for the Nasdaq at 11,500 – 12,000.
This last peak of the bull market is now months away, not years, as many suggest. I see a peak between the end of March at the latest and February 2021 at the latest. The best range would be 11,000 to 12,000 between the end of May and the elections.
If I had to give my choice so early in this late game, I would choose between the end of August and the end of October, from 11,000 to 12,000 in the Nasdaq.
We'll see … I examine more scenarios and iterations in March Boom and bust newsletter, which will arrive at your inboxes at the end of next week.