Wall St's unusual gains a source of worry

WALL Street's record-breaking run is now into its sixth year since the financial crisis of 2008. The Dow Jones Industrial Average has rebounded 140 per cent since the bankruptcy of investment bank Lehman Brothers in September of that year and the index closed last week at its umpteenth all-time high this year.

While welcomed by many investors, it has to be said that this outperformance is most unusual. It has confounded many sceptics who warn that US stock prices have been in bubble territory for months and must surely be headed for a serious correction.

One indicator of trouble is that Wall Street indices have not fallen by 10 per cent or more since mid-2011. Another is that the S&P 500 has not risen or fallen by one per cent or more in 45 trading days, the first time since 1995 this has happened. This near-total absence of volatility is taken to suggest that the market is gearing up for a big move, with the bears betting this will be on the downside.