After all, most investors — especially those piled into increasingly popular index funds — gain only when the stock market goes up. And they have done just that since November 9, with the S&P 500 up nearly 11% after the election and before President Trump's administration has had a chance to implement any of its plans seen as being pro-business.
But the speed of the most recent rally, which brought the Dow Jones industrial average above 21,000, made US stocks even more overvalued by most measures and has some strategists eager for a pullback.
In February, the Dow recorded 12 straight days of closing at all-time highs, one day short of the longest streak.Andy Kiersz/Business Insider; Gluskin Sheff
"Some kind of consolidation or pullback would be perfectly normal and, honestly, probably the best thing if you're bullish," Ryan Detrick, the senior market strategist at LPL Financial, told Business Insider. "You don't want to see a blow-off top to 22,000 or 23,000 in a short time frame," he said, referring to the Dow.
The Dow's move to 21,000 from 20,000 in 24 days matched the fastest all-time thousand-point move, recorded in May 1999. In February, the index recorded 12 straight days of closing at all-time highs, one day short of the longest streak.
"Don't think that investors don't want a pullback," said Quincy Krosby, a market strategist at Prudential Financial. "They want to burn off some of that froth, that enthusiasm, and they want valuations in stock prices to pull back in," she told Business Insider.
8 years and counting
Old age does not kill bull markets. But amid the second-oldest one in history, and with some measures of valuation and investor sentiment at levels most recently seen at previous market tops, the parallels to past bubbles are being drawn.
Professor Jean-Paul Rodrigue of Hofstra University is the creator of the following illustration of stages of a bubble. We asked him to describe the current status.
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