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Stock Market Recovery Sets Record, Is Melt-Up Next?

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Stock Market Recovery Sets Record, Is Melt-Up Next?

It’s been 100 trading days since the lows on March 23. The rebound we’ve just experienced is the largest in the last 90 years.

The S&P 500 has rallied more than 50% since the lows, and that’s the biggest 100-trading-day rise since the period ending Aug. 18, 1933, according to Dow Jones Market Data.

Bespoke Investment Group noted the same thing yesterday, sending out a tweet that said “Tomorrow the S&P 500 will mark 100 trading days since the Covid Crash low on 3/23. The ~50% gain over the last 100 trading days would be the biggest since 1933.”

The whipsaw action in the S&P has been one for the record books, with the fastest plunge into a bear market in history, followed by an equally-historic recovery.

Not to be outdone, the Dow Jones Industrial Average also remains on pace for its largest 100-trading-day gain since August 1933. Additionally, the Nasdaq is on pace for its best 100-trading-day gain since the peak of the dot-com bubble in March 2000.

A Melt-Up Happening Next?

This massive run-up has at least one Wall Street veteran wondering if the next step is a melt-up.

Ed Yardeni, chief investment strategist at Yardeni Research, said in a recent blog post, “We live in interesting, though not unprecedented, times. The Roaring 1920s could be a precedent for the Roaring 2020s.”

He compared the 1918 Spanish flu pandemic that preceded the Roaring 1920’s to the coronavirus pandemic today. The current crisis could precede the Roaring 2020’s.

“The good news is that the bad news during the previous precedent was followed by the Roaring 20s. So far, the 2020s has started with the pandemic,” he wrote. “But there are plenty of years left for the prosperous 1920s to become a precedent for the current decade.”

“Today’s doomsters could be confounded by biotechnological innovations that deliver not only a vaccine for COVID-19 but for all coronaviruses. Scientists are investigating an array of approaches to fight COVID-19. Hopefully, beyond finding a cure or a vaccine, one of the beneficial outcomes of all this research will be that scientists learn many more ways to combat illnesses in general and viruses in particular,” Yardini added.

So where do we go from here?

Yardini believes we’ll have a strong finish to the year for the S&P 500 due to more stimulus and a resilient bullish trend. He predicts the momentum will carry into 2021, where the S&P could end the year with a double-digit gain.

“The 1920s ended with a stock-market meltup followed by a meltdown,” he said. “The 2020s may already be seeing a meltup, begun on March 23.”

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