February 26, 2019

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

– H.L. Mencken

The Dow Jones Industrials finally surpassed 26,000 again, after rising for nine straight weeks – the longest weekly winning streak since 1995. On an intra-day basis, that venerable index is up a tantalizing 19.99% in 58 days – from 21,712.53 last December 26 to 26,052.90 on Friday, February 22.  Along the way, we enjoyed the best January in 32 years, and February has defied its historic tendency of being a “letdown” month by rising 4.13% through Friday. NASDAQ is up 21.6% since Christmas, and the small-cap Russell 2000 is up a phenomenal 25.5%. But you wouldn’t know any of this by watching the nightly news.

MRC Business searched Nexis for all ABC, CBS, and NBC transcripts mentioning stocks, stock market, or the Dow between December 1, 2018 and February 15, 2019. They monitored broadcasts of ABC World News Tonight with David Muir, CBS Evening News, and NBC Nightly News with Lester Holt to determine the nature of all their stock coverage. Each news report was categorized as positive if it was about a rising market or negative if it was about the market falling. Result? Negative coverage won by a ratio of 4-to-1.

Some examples: On December 4, the market decline led the Nightly News and Evening News broadcasts. One of the on-screen headlines screamed: BREAKING NEWS: MARKET PLUNGE, with a prominent photo of President Trump next to a declining stock chart. Three days later, on Friday, December 7, all three networks covered another decline, in what CBS called the “worst start to December since 2008.”

Good news didn’t merit much coverage. After the Dow enjoyed its best January since 1987, there was not one second of network coverage. Two weeks later, on February 15, when the Dow rallied over 400 points and completed eight straight rising weeks, not one of the evening news shows mentioned either fact.

Why? Good news is boring and bad news is energizing. Fear generates an adrenalin rush that keeps those eyeballs glued to the TV. MRC noted that negative headlines about a “nosedive,” “meltdown,” or “worst Christmas Eve ever” dominated the December shows, while January’s rapid recovery was almost totally ignored. There is no great interest in “spectacular rebounds,” as dramatic as those words may seem.

There is also the political angle. Presidents get undue credit or blame for the stock market under their watch. A strong market in President Trump’s first year surprised and upset some journalists who consciously or unconsciously wanted to undermine his presidency. When the market finally declined in late 2018, they reported the cataclysm with great zeal and energy, but January’s return to the market’s long-term upward bias has found the three main TV news network suddenly mute on the markets.

No News is Good News

‘Nulla nuova, buona nuova’ (no news, good news) – an old Italian proverb

Lately the market rise has slowed, creating a sense of boredom, or unease. The CBOE Volatility Index (VIX) fell to its lowest average in four months. Bespoke Investment Group – which researches the significance of every day’s market – pointed out how flat the market was in the middle of last week:

“We realize that it has been a holiday-shortened week and everything, but you can’t get much more boring than the last three days of trading.  Heading into the final trading day of the week, the S&P 500 is within one point of where it closed out last week.”

– Bespoke Investment Group, February 22, 2019

This torpor is positive in the sense that it indicates we’re not close to entering a bubble situation. Markets usually die of excesses, not boredom.  The market in late 2017 was more like a bubble. The Dow crossed 23,000 on October 18, then hit 24,000 on November 30, and 25,000 on January 4, 2018. There were no significant corrections along the way. Then, the Dow crossed 26,000 just two weeks later, January 16, 2018. Similarly, it took the S&P only nine trading days to set new all-time highs at 2700, and then 2800.

THAT looked more like a “bubble” to me at the time. My Growth Mail column of January 23, 2018 was titled, “Market Milestones are Falling – Maybe Too Fast.” In that column, I expressed unusual caution:

      “Whoa, Nellie! Maybe it’s time for a breather! Big new barriers usually take some time to digest.”

– From Growth Mail, January 23, 2018

Nothing like that is happening now. January’s recovery was more like a “relief rally” from the extreme negative sentiment in December.  The February slowdown looks like what I foresaw in Growth Mail three weeks ago (February 4, 2019) – it’s neither a correction nor a great new rally, but a “pause that refreshes.”

Today, there aren’t any market bubbles or economic excesses like those that preceded previous crashes – like the commercial real estate bubble (S&L crisis) in 1990, the tech stock dot-com bubble in 1999, then those kinky real estate derivatives in 2007. No single sector is running away in bubble territory now. There’s no bubble in oil, no bubble in global or U.S. GDP growth rates, and no bubble in stock prices.

Technicians predicted an end to this bull market in late October 2018, when the S&P dipped below its support channel (see chart below). The bull seemed truly ended after the market collapse in December, but here we are on the cusp of March with no bear market, and a bull market about to turn 10 years old.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Next week marks this bull market’s 10th birthday. It began on March 6, 2009 on an intraday basis, and on Monday, March 9, 2009 on a closing basis. Along the way, the S&P 500 twice narrowly avoided a 20% correction, first in 2011 (-19.4%) and then last fall (-19.8%). It has not been a smooth ride, but don’t look now: The Dow only needs to rise 800 points (+3%) to reach a new all-time high, a great birthday present.

After the best January since 1987 and the worst December since 1931, we’ve still got some “catching up” to do, since S&P 500 earnings rose 24% in 2018 while the S&P index fell 6.2%. That’s a 30% differential between S&P earnings and price, pushing that index down to a historically normal 16 P/E earnings ratio.

This bull market has also coincided with what will soon be the longest economic expansion in American history. The previous record of 10 years (1991-2001) will be eclipsed if we’re still growing in July 2019, and every indicator points to positive growth in 2019, making 2019 a double 10-year market celebration.

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. *All content of “Growth Mail” represents the opinion of Gary Alexander*


Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report.

Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings.

Past performance is no indication of future results.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE: The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report. Request here a list of recommendations made by Navellier & Associates, Inc. for the preceding twelve months, please contact Tim Hope at (775) 785-9416.

Marketmail Archives