The postelection boom has been nothing short of incredible…

The S&P 500 Index was up nearly 6% in November, its best one-month return in a year. And stocks in just about every sector of the U.S. stock market have been moving higher.

Now, the major indexes have gotten stretched above their long-term trend. You might think that’s a bad thing… But history disagrees.

Instead, this kind of broad boom is rare. And when it happens, we can expect the good times to continue.

Let me explain…

A bull market is good… But a broad bull market is even better.

That’s when it isn’t just a few stocks pulling the market higher, but a majority of stocks all soaring at once.

A broad boom means the market is healthy. And a healthy bull market can keep rising – no matter how crazy it might seem at the time.

That’s the kind of boom we have right now. All three major U.S. stock indexes are rallying… And they all hit a rare extended level recently.

Specifically, the S&P 500, Nasdaq Composite Index, and Dow Jones Industrial Average all rallied more than 10% above their long-term trends last month.

To measure the long-term trend, we’re using the 200-day moving average (200-DMA). That’s just the rolling average of the past 200 daily closes. When stocks are above that average, they’re in an uptrend.

Here’s what the trend has looked like for the S&P 500 over the past two years. As you can see, stocks have been booming since the 2022 bottom…

The index entered a strong uptrend early last year. Now, though, we’ve gone a step further. The postelection rally has sent all three major indexes more than 10% above their 200-DMAs.

That’s rare. It has happened less than once a year since 1990. And while you might think this is a sign of a slowdown ahead, history tells a different story.

Not only do stocks not tend to fall after extended runs like these, they usually outperform. Here are the S&P 500’s gains after these setups since 1990…

As you can see, stocks aren’t due for a slowdown. They’re set to continue outperforming. It’s surprising… but true.

Similar instances led to gains of 4.2% in six months and 11.8% in a year. That’s solid outperformance versus just buying and holding. Plus, the market was up 90% of the time a year later.

The Nasdaq and Dow show similar outperformance after these occurrences. So according to history, this broad rally is exactly what we want to see as investors. It’s healthy – and it has a great shot at continuing.

It’s easy to nitpick a bull market. But if you had done that over the past two years, it would have cost you dearly. Don’t make the same mistake now.

Stocks are soaring… But it’s a broad, healthy boom. And according to history, the good times should continue in 2025.

Good investing,

Brett Eversole

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Source: Daily Wealth