Citibank says stocks are unlikely to enter a bear market anytime soon, so continue to buy the dip

Mine, Mine, Mine. Photo by Mario Tama/Getty Images.

Global stocks have been in a relentless bull market since 2009, continuing to grind higher no matter what was thrown at the rally.

Now, at eight years, it’s understandably got some investors wondering whether the run is coming to an end.

This bull market, by historical standards, is getting a little long in the tooth, and there’s no shortage of warnings going around that current valuations are looking a little stretched.

Throw in some iffy price action in US stocks recently, particularly in the tech sector, and it’s little wonder some think we may be at-or-near the top.

While that could mean that a correction or period of consolidation could be on the cards, Citibank’s global equity strategy team doesn’t think the recent price action is the start of something more sinister, pointing to its “Bear Market Checklist” to show that stocks aren’t showing the same warning signs that were seen before the last two major bear markets began in early 2000 and late 2007.

Here’s the checklist:

Source: Citibank

“Right now, only two of 18 factors are flashing sell compared to 17.5 in 2000 and 13 in 2007,” analyst at the bank wrote. “Global trailing and 12-month forward PEs are starting to look frothy, but the dividend yield and CAPE still look reasonable.”

Citi says that the checklist is not designed to be a market timing indicator for a short-term corrections, but rather larger moves.

And, unless the warning signs start to flash again, the bank says any small pullback in the near-term should be bought.

“Right now, it is telling us to buy the next dip.”

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