Happy 2nd birthday, bull market! What now?

NEW YORK (CNNMoney) — The bull market is celebrating its second birthday. Banks and retail stocks have led the way but investors may want to think about changing their bets if they think the party is going to continue.

The S&P 500 has doubled in value from the bear market low of 666.79 on March 6, 2009. All ten sectors in that index have rallied, according to Standard & Poor’s Equity Research.

But if the economic recovery continues to pick up steam, different sectors of the market will begin to take the lead.

“It’s important for investors to understand how different sectors perform during different periods of a stock market’s cycle and as the economic recovery matures,” said James Stack, a market historian and president of InvesTech Research.

According to Stack, the average period between the start of a bull market and the start of the subsequent bear market is less than four years.

“As we come upon the bull market’s second birthday, we’re moving into the latter half of this rally,” he said.

By historical standards, that means financial firms and consumer discretionary companies, which have been among the current bull market’s biggest winners, may lose some of their luster.

“Financial companies suffered the most severe pain during the recession and have bounced back to become the best performing sector because the government stepped into to offer support,” said Christian Hviid, chief market strategist at Genworth Financial Asset Management.

That includes AIG (AIG, Fortune 500), which nearly collapsed in September 2008 before the government bailed it out with $182 billion. The insurer’s stock has shot up a remarkable 430% since the market bottomed and is among the S&P 500’s best performers during the past two years.

While they may not shine as brightly, Hviid said financial company shares will continue to deliver solid returns.

“The financial sector is still unloved, so it may be a good contrarian play,” he said. “Banks are still trading at deep discounts, and it seems like we’re turning a corner in terms of loan growth and charge-offs.”

Meanwhile, the retail sector, which has surged nearly 150% from two years ago, won’t continue its stellar run, Hviid said. He thinks profit margins will come under pressure from higher commodity costs.

Technology stocks are also typically strong performers in the early part of a bull market, but since consumer and business spending has been only slowly recovering, the sector has barely outperformed the broader market.

But as consumers and corporations begin to loosen their purse strings, experts say tech stocks will continue to rise.

Take me to your new leaders

As the bull market continues its course, energy stocks, which have thus far underperformed the market, are likely to take the spotlight.

“Investors are already looking at the energy sector because of surging oil prices, but the sector will do well even beyond the unrest in the Middle East,” Hviid said. “It’s attractive based on global growth outlooks, especially as energy consumption increases in emerging markets.”

Materials, industrials and telecom stocks are also poised for solid gains, InvesTech Research’s Stack said.

While the health care sector is usually a defensive pick during a falling market, the sector may begin to surprise investors a bit earlier.

“Health care stocks didn’t have a good 2010, but we’re past the aftermath of health care reform,” said Joe Milano, portfolio manager of T. Rowe Price’s New America Growth Fund (PRWAX). Health care companies, including Covance (CVD) and WellPoint (WLP, Fortune 500), represent about 10% of the fund’s holdings.

Plus, even though experts largely agree that the broader market has yet to peak, it’s never too early to play it a little safe.

“We have all the ingredients for the bull market to continue,” Stack said. “But we know it won’t last forever, and it’s better to add some defensive positions on a gradual basis than it is to make a dramatic move after all the warning flags pop up.” 

First Published: March 4, 2011: 7:57 AM ET