The continued upward trajectory of the U.S. markets has continued through mid-December, completing what has obviously been a strong year. But with the market’s advances being attributed almost exclusively to stretched valuations and the hope of additional future stimulus, it seems likely that 2014 may present a reversal of those trends.
History teaches us that bull markets tend to last about five years, as was the case from 1996-2000, 2003-2007, and now 2009-2013. The first bull market from this list ended in a 45 percent loss for the S&P 500, and the second resulted in a 55 percent decline. More than ever, it’s important to be aware of turning points and adjust accordingly.
clearTREND offers monthly market analysis and research on Northeast Wisconsin’s key economic sectors. For the new year, we highlight the personal financial planning sector, and the health & wellness sectors of the economy – both currently show generally positive trends. We also feature employment sectors for the greater Oshkosh area.
This month’s clearTREND U.S. Economic Health IndexTM shows remarkable strength, with 84 percent of U.S. economic sectors expanding. Couple that with a drop in the number of contracting sectors: now only 6 percent compared with 9 percent in December.
“Here’s where good news becomes bad news: The extreme number of expanding sectors is really a counter-indicator,” says Mark Scheffler of The Appleton Group. “When the number of expanding economic sectors reaches extreme levels, we see the same ‘irrational exuberance’ that caused so many problems in the early part of this decade. It could continue upward for a while, but when the tide turns it can cause significant economic disruptions.”
One thing has been certain, though: Most companies headquartered in Wisconsin continue to ride solid upward trends. Companies such as Oshkosh Corp., Plexus and Johnson Controls show uninterrupted positive trends and others show recovering stocks like Baylake Bank, MGIC Investment Corp and Manitowoc Company.
Click here to view this month’s economic data in our digital issue.