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The Second Strongest Year in Stock Market

With a total of 75 new all-time highs, this year has been the second strongest in the stock market since 1941.

Since 1941, the strongest year was 1995 with 80 new all-time highs and 34% return for the S&P 500. This year comes second with 75 new all-time highs and 25% return as of December 22. There is low probability the 1995 record will be broken in the remaining six trading days of the year but that has little importance.

Strongest Five Years Since 1941

Number of new all-time highs Total Return
1995 80 34%
2021 (YTD) 75 25%
1954 73 45%
2017 67 19%
1964 61 13%

Below is the relevant chart with all years since 1941

Note that years with a high number of new all-time highs have been exceptionally difficult for shorts and this year was one of them. When about a third of the days register new all-time highs, there is virtually no room for shorts to profit. If fact, there is probably no strategy that can profit by taking short positions in such environment. These strong markets are profitable for long-only and buy the dip traders.

Despite the exceptional strength this year, the 90s still remain the most bullish environment in the history of the market.

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Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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