6 Charts on Stocks Making New All-Time Highs

Market Blog Posted by lplresearch

Wednesday, August 25, 2021

The S&P 500 Index made yet another new all-time high yesterday, the 50th on the year. “The all-time record for any one year is 77 S&P 500 new all-time highs back in 1995,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Incredibly, 2021 is currently on pace for 78 new highs. There’s a long way to go, but this has been an amazing year and this is yet another way to show it.”

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As impressive as 50 new highs is, investors need to remember that new highs happen in clusters that can last decades. We’ve been sharing this chart for years, saying exactly that: previous periods of new highs lasted much longer than most expected. Mark Twain said history doesn’t repeat itself, but it often rhymes. If history rhymes once again, we could still have several more years of new highs.

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Another interesting stat about S&P 500 all-time highs is every month so far in 2021 has seen a new high, 8 for 8. Only once have all 12 months made a new all-time high and that was in 2014. This is somewhat surprising, given the S&P 500 gained only 11.4% in 2014, but it was a very slow and persistent move. Most investors (including this author) would guess it was 1995, but that spectacular year saw new highs in ‘only’ 10 months.

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Although August tends to be historically weak for stocks, that hasn’t been the case this year. In fact, the S&P 500 has made an incredible 9 new highs already this month, the most since 1929. No, we don’t think this is another 1929, but this is just another way to show how astounding this bull run has been.

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As shown in the LPL Chart of the Day, 50 new S&P 500 all-time highs before the end of August is quite a feat. In fact, only twice has the 50 level been cracked through the end of August, in 1964 and 1995.

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So what happens next? The rest of the year in 1964 the S&P 500 added 3.6%, while it added 9.6% in 1995. Below we looked at all the years with at least 30 new all-time highs through August and sure enough, better than average returns the rest of the year are common. The final 4 months gained 4.7%, versus the average final 4 months gain for all years of 3.6%. Now this is skewed due to 1987s crash, as that was the only time stocks were lower the final 4 months after more than 30 new highs by the end of August. Smoothing things out, the median return jumps up to a very impressive 5.4%, versus a median return of 3.6% for all years.

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2021 is off to a roaring start and we continue to expect higher prices before all is said and done. The studies we did today do little to change our view. We’d use any potential weakness as an opportunity to add before potential higher prices.


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All index and market data from FactSet and MarketWatch.

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