March 9, 2011
Sheraz Mian
Director of Research
Today is the second anniversary of the amazing bull market that started in 2009. Since its low on March 9, 2009, the S&P 500 has gained almost 95%.
Given the nature of the day, it is only appropriate to contemplate the market’s course over the coming weeks and months. This is particularly so given the rise of ominous-looking dark clouds that have risen in recent days in the shape of the oil spike.
The start of the bull run preceded the end of the Great Recession in the summer of 2009. Since that time, the vitals of the U.S. economy have steadily healed. The financial sector is back on its feet, corporate profitability is close to its pre-recession highs, and the GDP is above where it stood before the start of the downturn. Even oil consumption has recouped all of its recession-induced losses and then some.
The momentum in the economy’s improving fundamentals have not only driven the bull run thus far, but helped it dodge obstacles like the European debt problems and fears of a double-dip recession.
And that momentum has only gotten stronger in the last three to six months. The economic recovery is no longer on training wheels and remains better positioned to withstand the shocks produced by the Middle Eastern turmoil.
The Libyan stalemate will keep the oil market on edge over the coming days. But I don’t buy into the doomsday scenarios that call for significantly higher oil prices. The market may not do much in the coming days given the oil backdrop, but the bull market is not finished yet. It has plenty of room to go from current levels.
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