- It's been two years since the S&P 500 bottomed during the COVID-19 bear market of March 2020.
- Since then, the two-year old bull market has been one of the strongest and fastest growing on record.
- Three charts help illustrate the strength of the current stock bull market and where it could go from here, according to LPL.
After falling 34% in a single month and experiencing its fastest bear market in history, the current bull market in the S&P 500 has turned two years old.
The S&P 500 found its bottom on March 23, 2020, and since then the index has staged the fastest and strongest recovery since World War 2, according to a Wednesday note from LPL Research.
"At the recent peak in early January, the S&P 500 Index was up 114%, making it the seventh bull market to double. The annualized return of 53.4% shows just how explosive this move was off the lows and does imply some type of break could be warranted," LPL's chief market strategist Ryan Detrick said.
One characteristic of strength seen in the current bull market was its speed of gains, which was seen early on during its recovery. The current bull market was the fastest rally since World War 2 to double in just under 18 months, according to LPL.
And compared to other bull markets that doubled, the current rally posted the best returns on its two-year anniversary, according to LPL. The S&P 500 has returned 102% since its 2020 low, which is just ahead the 2009 bull market's return of about 95% on its two-year anniversary.
So where could the current bull market in stocks go from here as it enters its third year? According to LPL Research, higher, but with more volatility and lower returns than in the first two years of the current rally. That's because prior bull markets that saw strong returns similar to this one usually spend their third year marching sideways and consolidating their recent gains before moving higher.
"As this bull market reaches the third year of life, investors need to remember that year three of bull markets tend to be a little tamer, with the larger gains happening in year one and two. Out of the 11 bull markets since World War II, we found that three of them ended during year three, while the ones that didn't end saw an average gain of only 5.2%," Detrick said.