New Highs Are a Bullish Sign for Stocks

Investing is simple. But it's not easy.

We know it's smart to buy when others are fearful... when it feels like the worst time to get in. But acting in those times is easier said than done. Instead, you might do the exact opposite and sell.

That's also true when stocks are hitting new highs. You might find yourself thinking: I need to lock in the profits. After all, "what goes up must come down," right?

Most of the time, that adage works. But in the markets, it's a huge mistake. You don't want to sell when stocks hit new highs... You want to buy.

Importantly, that's where we are right now. The S&P 500 Index broke out to a new all-time high last month. And that means more gains are on the way.

Let me explain...

It took a little more than two years, but stocks are hitting new highs once again.

Those two years were a dreary period for the economy. We saw the worst inflation in 40 years... a brutal bear market for stocks... and a similarly painful period for bonds.

In short, it has been a rough time since we last saw all-time highs. But now, the market is breaking out once again. Take a look...

We've been through an especially bumpy period... So investors still have their guards up. They see new highs as just another reason to worry about more bad news around the corner.

However, history shows new all-time highs aren't something to worry about. They're normal. And stocks tend to keep rising after cases like this...

To see it, I looked at every instance when stocks hit new all-time highs after not hitting a high in the prior year. That has happened 39 other times since 1950. And in the months that followed, stocks performed just fine. Check it out...

This level of outperformance might not make or break your wealth. But it does disprove the idea that all-time highs are a cause for concern.

Similar setups led to 4.9% gains in six months and 9.1% gains over a year. Both cases are slightly better than we'd typically expect for the market. And importantly, stocks were higher a year later 79% of the time.

So yes, investors have been through a lot recently. But new all-time highs aren't a sign that it's time to lock in gains.

Stocks don't have a history of crashing after hitting new all-time highs. Instead, prices tend to keep moving higher.

That means more new highs are likely in the months ahead. So we want to stay bullish – and stay invested – until the trend reverses.

Good investing,

Brett Eversole

P.S. Tomorrow, I'm sharing a brand-new recommendation in my True Wealth newsletter that has nothing to do with the U.S. stock market... or even catalysts like interest rates or the upcoming election.

It's a low-risk way to earn a massive 48% dividend yield (yes, you read that right). And it's part of a financial story that I believe could have a bigger impact on your money than anything we've seen in decades.

While I can't say more in fairness to my subscribers, I've made a special arrangement with my publisher to make sure you have a chance to read our full issue on Friday... Find out how you can access it right here.

Further Reading

The market finished January in positive territory. Historically, that's a bullish sign for the rest of the year. And thanks to another twist in the story, investors could see an additional 15% return by the end of 2024... Read more here.

The S&P 500 Index broke out in the last two months of 2023 – locking in gains of 26% for the year. And based on history, the gains aren't over. Stocks tend to keep winning after years with returns of 20% or more... Learn more here.