How Long Will the Bull Market Run?

Online activity points to investor unease.

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Equity markets worldwide are surging. The US stock market is enjoying an historically long bull run, and yesterday marked 121 consecutive months of economic expansion, the longest in US history. Since the depths of the financial crisis in 2009, the Dow Jones Industrial Average has gained more than 300 percent. This year, global stock markets have had their best first-half performance since 1997. Russian stocks are up more than 28 percent. In China, the Shanghai Composite Index is up nearly 20 percent. 

Shares rose even higher yesterday after the United States and China agreed to a ceasefire in the trade war. As markets roar, however, Predata signals suggest investors are uneasy. 

This weekend, activity on web pages related to stock market crashes reached its highest level in 8 months. Research into past crashes might reflect heightened concern about one happening in the near-term. As the chart below shows, only twice in the past year has online interest in crashes been higher. In early July 2018, it spiked when US tariffs against China came into effect, and again in October 2018 when stock markets in the United States and Asia experienced heavy selloffs.

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Furthermore, in another indication of unease, Reuters reports that investors have been putting a greater share of their money into “defensive” sectors, which produce higher dividends and have lower volatility. Predata signals that track online attention to the 11 S&P 500 sectors, reveal that interest in certain defensive sectors, such as Utilities, has been rising relative to more volatile sectors, such as Information Technology. 

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Taken together, these patterns of online attention indicate that investors are wary this era of historic returns may end soon.