Secular vs Cyclical Cycles: 1942, 1974, and 2009


From Stephen Suttmeier, Technical Research Analyst, at Merrill Lynch:


The overlay chart of the S&P 500 lined up off the generational lows of 1942, 1974, and 2009 suggested the risk of a cyclical peak (NOT secular) in mid 2015 (high in May 2015 so far) similar to mid 1948 and late 1980 peaks. We view this as a potential cyclical interruption of the secular bull trend, which we believe is in its early innings with potentially 10-15 more years of upside. In our view, a cyclical interruption means the risk of a drawdown of 20% or more but a potential longer-term buying opportunity, akin to mid 1949 and mid 1982, and then another strong cyclical bull market within a secular bull trend.

S&P 500 with the generational lows from 2009, 1974, and 1942 lined up
click for ginormous chart
secular cyclcical gen lows
Source: MLPF&S