90% of S&P 500 stocks are higher this year, closing in on the 2003 record

The number of winning stocks this year is approaching a 10-year peak, writes Howard Silverblatt, senior analyst at S&P Dow Jones Indices. You’d have to go back to 1980 for the previous record. Here’s what Howard is sending to his email subscribers:

You Take My Breadth Away

           …  Year-to-date 451 of the S&P 500 issues are up (47 down), which on an annual basis is the best since 458 issues increased in 2003.  The 2003 number is also a record high from 1980, when my data series starts.  The number is significant since it shows the depth of the recovery.  In the late 1990s, the market aggregates became dominated by technology, which grew on ‘faith’ and ‘hits’, as compared to sales and cash-flow.  In 1998, the market returned 26.67%, yet only 57.8% of the issues were up, and in 1999, the market grew 19.53%, but less than half, 48.2% of the issues, were up.  For the 2013 year-to-date, 90.2% of the issues are higher, with the market aggregate up 23.39%; 270 issues are above that aggregate, with 140 issues up at least 40%.  Surely a significant number of people are seeing large gains, and surely many are not, since they remain out of the market.

            … Chasing returns is not a good reason to invest, but when enough do it the short-term impact is more buying and higher prices. Which we may be getting close to if the market stays anywhere near its current level.

(fyi – Friday set two new official highs, intraday of 1759.82, and a close of 1759.77)


Battle of the Rallies: 1983 vs 2009

The Wall Street Journal has an interesting item today comparing the monster rally this year to the 1983 rally that heralded a monster bull market. Unfortunately, the WSJ notes, the differences are bigger than the similarities:

The market is not nearly as cheap now as it was then. When the 1980s bull market began, the S&P 500 was priced at less than 7 times trailing earnings. Even after a 69% rally, that multiple was just 10 times earnings.

The latest rally began with the market at a P/E of 13. The ratio has bloated to nearly 19, compared with its long-term average of 16.

In April 1983, when unemployment was last at 10.2%, it was on its way down. Now it looks like unemployment could rise for months.

And when the 1980s rally began, the Federal Reserve’s key policy interest rate was 11%, meaning it could simply slash rates to get things moving again. Today, the fed-funds target rate is nearly zero.

via Investors Hope It’s a 1983 Flashback – WSJ.com.

The battle of market rallies: 1983 vs 2009

The battle of market rallies: 1983 vs 2009

Chart via wsj.com