History suggests 2023 will be better for shares

Stock markets may be overbought and potentially complacent right now, but that doesn’t mean recent strength is just another bear market rally. In fact, it resembles the start of bull markets. So says Carson Group’s Ryan Detrick, noting the S&P 500′s 13.8 per cent gain over the past two months. He found 13 previous instances where stocks gained more than 13 per cent in a two-month period.

A year later, stocks advanced on all but one occasion, enjoying average gains of 20.7 per cent. Additionally, the S&P 500 last week closed above its 200-day moving average for the first time in more than seven months. Again, Detrick found 13 instances where it closed above its 200-day average for the first time in more than six months. The data is very bullish for subsequent three- and six-month periods. Crucially, stocks were higher a year later some 12 out of 13 times, posting average gains of 18.8 per cent.