· The S&P 500 celebrated the one-year anniversary of its all-time high on May 21, 2016.

· One-year periods without new highs during bull markets have often preceded strong stock market gains.

· We continue to expect a volatile, range-bound stock market for the balance of 2016.

The one-year anniversary of the S&P 500’s all-time high took place on May 21, 2016. Stocks have largely been spinning their wheels for the past year. The S&P 500 has failed to return to its May 21, 2015, record high for 12 months. Stocks have actually been spinning their wheels for even longer, considering the S&P 500 is at the same level as it was on November 18, 2014—an 18-month stretch. This week we take a look at what the stock market’s lackluster performance since the last record high might mean for the current bull market, now the second longest since 1950.

Did This Bull Market Happen Already?

So does this long period without a new high mean the aging bull market, now more than seven years old, is about to end? Before we answer that question, keep in mind that it is possible that the current bull market actually ended on May 21, 2015. If the S&P 500 does not reach another new high before dropping 20% from that high (which would leave the S&P 500 at 1704), then the bull market will have ended in May 2015. We don’t know yet, but it’s possible that the bull market will not have celebrated its seventh birthday on March 9, 2016 (don’t we all wish we could undo previous birthdays). We see the potential for more new highs before the next bear arrives; but just in case, now we know what’s at stake.

Where Do We Go From Here?

So what does this drought mean? For perspective, going back to 1955 and including the most recent period, the S&P 500 has gone a full calendar year without a new high 13 times (no new highs were made from 1929 through mid-1954 so there is no need to look further back). Six of those new high droughts took place during bull markets, six were during bear markets, and we’ll call the current one a question mark [Figure 1]. The droughts lasted as little as 259 trading days in 1994–95 (for reference, one calendar year is 252 trading days), or as long as nearly 1900 trading days during the late 1970s and early 1980s.

Looking at all of those 12 previous instances when the S&P 500 didn’t make a new high for a full year, subsequent near-term returns were lackluster. Three and six months out, the average and median gain for the S&P 500 was very close to flat. But going out a full year, average and median performance was close to the long-term average annual gain for stocks at about 9% [Figure 2].