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What Does a Dying Bull Market Look Like?

By Dr. Steve Sjuggerud
Tuesday, May 30, 2017

Last week, thousands of readers tuned in to hear Porter Stansberry and me talk about the day the bull market ends.
 
My take is that this market still has upside – and stocks still have room to run.
 
Why do I think this? In short, the market isn't "acting" like a market that's at the top yet...
 
The last truly great boom in U.S. stocks was the dot-com bubble of 1999. I expect this great boom in stocks will end in a similar way.
 
So how does today's market compare to 1999?
 
Almost any way you size it up, today's bull market has a long way to go on the upside before it resembles 1999...
 
One interesting way to compare them is through the "health" of the markets...
 
In a strong bull market, more stocks should be going up than going down – right? Sounds basic.
 
Well, what if the overall market was going up... but more stocks were falling each day than rising?
 
That's what was happening at the end of 1999.
 
You can see this in the chart below. The blue "advance/decline" line is a simple indicator... You take the number of stocks that went up in a day, and you subtract the number that went down. If more went up, this line goes up. If more went down, this line goes down. Take a look...
 

In a typical bull market, as the market goes up, the advance/decline line goes up too.
 
So what happened in 1998-1999 is interesting... The overall stock indexes were going up. However, more stocks were falling than rising.
 
That was not a healthy market. On the contrary – that's what a dying bull market looks like.
 
How does this compare to today?
 
Today's advance/decline line looks nothing like the late 1990s. Take a look...
 

Today's market is still "healthy."
 
The number of advancing stocks is still higher than the number of declining stocks each day. Based on this indicator, the market is not looking "weak" yet.
 
This isn't the only indicator I look at, of course. It's just one of many, showing a similar conclusion. This one isn't foolproof either – it didn't give any advance warning at all in some market downturns.
 
Again, it's just one indicator... one piece of evidence among many that tells me we still have more upside ahead.
 
Yes, this is the second-longest bull market in history. No, it doesn't feel like a top – yet.
 
Invest accordingly.
 
Good investing,
 
Steve
 
P.S. I want to give credit where credit is due... Ben Carlson of Bloomberg.com and Ritholtz Wealth Management wrote a great story on this. You can read it by clicking here.




Further Reading:

Steve believes we're entering the final innings of this great bull market – and we could see explosive gains ahead. Catch up on his essays detailing the "Melt Up" in stocks right here:
 

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
Raytheon (RTN)... "offense" contractor
Lockheed Martin (LMT)... "offense" contractor
Boeing (BA)... planes
Southwest Airlines (LUV)... airline
United Continental (UAL)... airline
Vail Resorts (MTN)... ski resorts
Marriott (MAR)... hotels
Citigroup (C)... banks
Visa (V)... credit cards
MasterCard (MA)... credit cards
Amazon (AMZN)... "FANG" stock
Alphabet (GOOGL)... "FANG" stock
eBay (EBAY)... online auctions
Sotheby's (BID)... global art auctioneer
Best Buy (BBY)... TVs, computers, appliances
Activision Blizzard (ATVI)... "addictive" games
Electronic Arts (EA)... "addictive" games
PepsiCo (PEP)... "addictive" drinks
Domino's Pizza (DPZ)... pizza
Weight Watchers (WTW)... weight-loss programs
Humana (HUM)... health insurance
UnitedHealth (UNH)... health insurance
Quest Diagnostics (DGX)... "one of the world's greatest tailwinds"
 
NEW LOWS OF NOTE LAST WEEK
 
AutoNation (AN)... America's largest auto retailer
Advance Auto Parts (AAP)... auto parts
Bed Bath & Beyond (BBBY)... home goods
Signet Jewelers (SIG)... Kay Jewelers, Zales, Jared
Ralph Lauren (RL)... clothing
Urban Outfitters (URBN)... clothing
Barnes & Noble (BKS)... bookstores
AMC Entertainment (AMC)... movie theaters

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