The last week of the first quarter ended on a positive note as the stock market had another strong week. This occurred as the banking scare continued to show signs that it’s contained, along with the release of a lower-than-expected inflation report.
As the stock market puts more distance from its October lows, there’s a higher probability that those were indeed the lows of the bear market and the rally can continue among plenty of negative press, albeit with ups and downs. It’s important to remember that bear markets have relatively short life spans, as measured by the drop from a previous high to low. A bear market that lasts 6-18 months is typical while one of 24 months or longer is unusual. The stock market is now 15 months from the previous highs and as this duration increases there is less and less probability that the market remains in a bear market and more probability that it entered a new bull market cycle last October.
This month will be a crucial test to see if the market can continue the advance as corporate earnings begin to be released in the next couple of weeks. There is also another monthly round of jobs data and inflation reports to signal whether or not the Fed’s policy to reduce inflation without causing a recession is still on track.
Photograph by: Jesse Echevarria on Unsplash
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