Can This Bull Keep Running?

Leuthold Weeden says yes, cautiously.
Can This Bull Keep Running?

Could the recent bull market in stocks continue for another year? Possibly, according to Leuthold Weeden Capital Management, the Minneapolis investment shop founded by market-cycle guru Steve Leuthold.

Portfolio manager Doug Ramsey said at a spring forecast event on May 16 that the Standard & Poor’s 500 could peak at 1,500 to 1,550 next spring. The index’s last tops came in March 2000 (1,527) and October 2007 (1,565). 

“I think we’ll flirt with those highs,” Ramsey said, citing stock prices’ momentum, accelerating dividend growth, and the strength of the economic recovery. In early June, he said even with recent declines, he believes the market will remain positive in the longer term.

But can this bull really keep running? Leuthold’s Major Trend Index, an armada of 190 indicators, had fallen to 1.03 by early June—into neutral ground (0.95 to 1.05) instead of bullish for the first time since December.

A year ago, the firm’s three largest funds were 70 percent in equities. In mid-May, their managers cut back to 60 percent. Ramsey said if the index stays neutral much longer, their equity position could fall to 50 percent. 

So while the party’s not over, it appears the hour is getting late.