If anything, a number of respectable analysts cheerily predict that any efforts to sell into market strength in May will be met quickly with a steady demand for buying into weakness.
The case for the endless stock rally hinges on the activity of the world's central banks. Many contend that the U.S. Federal Reserve, the Bank of Japan as well as the European Central Bank have been far more aggressive than they were in earlier years of the market's rebound. Officials in charge of monetary policy have added hundreds of billions in bonds to bloated balance sheets, pushing yields lower and increasing risk appetite. Moreover, some countries are taking stakes in equities to further push asset prices higher.
Nevertheless, the pundit community may be ignoring the probability that central bank decisions are largely factored into the last 11 months already. The S&P 500 has gained ground in six consecutive months, 10 of the last 11. Additionally, the S&P 500 has powered ahead without a 5% correction for more than 100 trading days... a rather uncommon actuality for any bull run.Equally compelling is the fact that a 5% pullback has occurred at least one time in the first five months of every year since 1996. Is the ancient news of central bank liquidity so powerful that it can override historical trading patterns, weak corporate revenue, a slowdown in global growth, serious debt troubles in the eurozone and the wisdom of "sell high, buy low?" While those with significant cash on hand may feel like they have been waiting on Mr. Godot or Mr. Guffman, they should recognize that Mr. Market's "Hyde-side" always appears. My thought is that he will appear sooner, although admittedly he may arrive later... much later. If you have been more conservative, and if you have not captured as much of the 10%-11% year-to-date upside that an all-stock portfolio might have provided, consider the history of the S&P 500.