IF THE bull market didn't die in 2015, it suffered its biggest wound to date.
The major indexes finished a year of violent swings bleeding red ink for the first time in the seven-year bull market. The Dow Jones Industrial Average lost about 2.2 per cent for 2015 before taking dividends into account. That was the first loss since the blue-chip index shed about one third of its value in 2008. For the broader Standard & Poor's 500, the loss was only 0.7 per cent - still a deeper wound than the minuscule one incurred in 2011, when the S&P 500 finished with a loss of .003 per cent.
Now, traders are waiting to see if the bears have slayed the bull market or if the bulls can struggle on. History is largely on the bears' side. The average bull market is about four years in length and only the decade-long boom in the 1990s has outlasted the current upturn in post-war America.
The bulls, like Phil Orlando, chief equity strategist at mutual-fund firm Federated Investors, argue that the bears have already exhausted their attack. The bears pounced in July, betting that global markets and economies were unprepared for the shock of a Federal Reserve rate hike. Those bets proved correct: Janet Yellen's pledge to hike before the end of the year drove the dollar higher against global currencies, putting pressure on emerging markets. The stronger dollar combined with reports of slowing growth in China depressed the prices of oil, copper, zinc, gold, wheat - of almost every commodity available for purchase.
Commodities are indicators of global economic strength; seeing oil and iron ore at their lowest levels in more than a decade led to talk of another global recession. In a more immediate sense, the business of extracting and trading commodities was itself a source of growth. Without the shale-oil boom in the US, unemployment would likely have been higher for longer.
So the commodity bust, Chinese issues and the dollar spike were all good reasons to sell economically sensitive stocks in the second half of 2015, Mr Orlando and other bulls concede. But, they argue, these trends have now played themselves out.
After all, in 2015, oil prices went from about US$60 to as low as US$34 a barrel. By definition, Mr Orlando argues, they cannot lose that much value in 2016.
The bears, such as Sibilla Global Fund hedge fund manager Lorenzo Di Mattia, counter that the financial and economic ripples from the 2015 moves in the dollar and commodities are still making themselves felt. Mr Di Mattia doesn't anticipate another financial crisis (although it is possible that the recent freezing of the energy-oriented junk bond market becomes a full-fledged credit crunch). Rather, he sees stock selloffs caused by rates rising in the absence of economic growth. Usually, the Fed raises rates when people are worrying about the US economy overheating. This time, the economy is tepid at best.
Other strategists say the rate issues will fade in significance.
"I would say the (new year) ends a year of the Fed having an overbearing influence on the market (leaving) many afraid to commit due to the constant threat of rates being raised," said Joe Kinahan, chief derivatives strategist at TD Ameritrade.
This year, investors could be paralysed by trepidation of another transformative event: the November presidential election, said Mr Kinahan. The power of politics to move markets was made clear when biotech indexes crashed in the wake of comments from Democratic presidential candidate Hillary Clinton in September. Mrs Clinton has tacitly promised price controls for drugs in the US, where medicine for hepatitis C and other diseases can be as expensive as US$1,000 a pill, with treatment courses often costing more than US$100,000.
If Republicans get the upper hand, the health-care sector could be in for a different sort of shock. Many Grand Old Party nominees have promised to roll back provisions in the Affordable Care Act or, as it's known to the opposition, "Obamacare".
Last year, every investor had to factor the outlook for interest rates into every decision. This year, Mr Kinahan said, the talk on Wall Street will revolve around "the new Congress, the new White House, and how taxation and regulation will affect businesses".