“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria”. Sir John Templeton
We might sound like a broken record, but stocks had another great week last week and made more new highs. The S&P 500 traded above 7,300 for the first time ever and now has 16 all-time highs in 2026. The main catalyst for this rally has been just an incredible Q1 earnings season, with 84% of companies in the S&P 500 beating earnings estimates so far (versus the 10-year average of 75%) and 80% beating on revenue. Year over year, first-quarter earnings are up an incredible 27.7%, the best growth since Q4 ’21.
We understand many are confused as to why the stock market is soaring in the face of scary headlines and higher crude oil prices, but the bottom line is that earnings are justifying this bull market. Below, we will discuss five other reasons the bulls may remain in control.
Six in a Row
After last week’s more than 2% gain for the S&P 500, the index is now up six weeks in a row for the first time since late 2024. What stands out is that it has gained more than 16% during this six-week win streak, the second-best ever (only coming off of Covid was stronger).
We found nine other times the S&P 500 was up six weeks in a row and up at least double digits, and you have to go back 80 years for the last time stocks were down a year later. In fact, the most recent seven instances all saw higher (in some cases substantially higher) returns. Going out six months to a year showed extremely strong performance, with an average gain a year later of 17.2%, about twice the overall average yearly return. We’ve noted many reasons to expect continued higher returns in 2026, and this does little to change our bullish views.
Stocks Rarely Peak Now
New highs in May (and June) are another great sign, as stocks rarely peak for the year during these months. In fact, going back 76 years, stocks have never peaked in June and only twice in May. This is another clue that more new highs could be coming, and not to expect a major peak anytime soon.
It Isn’t Just Five Stocks
Yes, some of the moves we’ve seen in technology and semiconductor/memory stocks have been historic, but that doesn’t mean they are the only stocks going higher. They might be up more, but we still see many stocks participating in this bull market. For example, the stock market in China just hit a four-year high, and in Japan, it hit new all-time highs as well, showing this is a global bull market.
Last Wednesday saw the NYSE advance/decline line hit a new all-time high. This is a cumulative total of how many stocks go up versus down each day, and history tells us that new highs here suggest the bull market is still quite healthy. Lastly, we’ve found that market breadth tends to peak well before actual price, so a new high in breadth suggests this bull has plenty of time left.
It’s Been a Long Time Without a 1% Down Day
Our friend Frank Cappelleri, founder of Capp Thesis, noted recently that it’s been a while since we’ve seen a 1% down day, and we found it very interesting. The S&P 500 has made an incredible eight 1% gains in a row without a 1% decline, the longest such streak since late 2015. We know this recent rally has been historic, but this is another way to show this.
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Looking at the 13 other times we saw eight 1% gains in a row, the future returns weren’t necessarily wildly bullish, but they were still better than average across the board. In other words, this definitely is not a bearish signal.
Where Are the Bulls?
The lack of excitement showing up from investors is amazing with the run we’ve seen. Go read the famous quote from Sir John Templeton at the top and ask yourself where is this rally? I’d argue we are still in the skepticism stage. Sure, there are pockets of optimism, but as someone who travels the country to talk with clients, most are still quite skeptical.
This latest cover from The New Yorker sums it up: Red, White, and Kinda Blue.
With a labor market potentially firming up, record earnings, and a stock market at new highs, it is hard to think that a magazine cover like that suggests we are close to a major peak.
Additionally, in the face of more gains, the number of bulls in the American Association of Individual Investors’ sentiment poll only gained 0.2% to 38.3% last week. We like this from a contrarian point of view.
Lastly, the University of Michigan Consumer Sentiment Index hit the lowest level ever last month. Take note, confidence was the highest it had ever been in 2000, right at a major peak. We’ve looked, and stocks tend to do much better a year after low readings than high readings, so this is another feather in the cap for the bulls.
We’ve maintained our equity overweight for going on more than three years now and continue to expect the S&P 500 to gain between 12-15% this year when all is said and done. Are there worries? Of course, there are, but we continue to think the positives outweigh the negatives. As always, thank you so much for reading what our team has to say, and for more of our thoughts on AI and its massive capex spending, please watch our latest Glass Half Full video below.
Frank Cappelleri is not affiliated with CWM, LLC. Opinions expressed by this individual may not be representative of CWM, LLC.
For more content by Ryan Detrick, Chief Market Strategist, click here.
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