Does the Bull Market End Now or Continue On?
Important September 1st. Update on: The third Bull Market since 1995.
The last two Bull markets, including this one, have one thing is common ... what is it?
A quick look at the rectangle areas on today's Monthly S&P 500 chart gives you the answer. A level of 1103 on the S&P has been a pausing and consolidation area for each of the three Bull Markets.
The behavior of all 3 Bull markets has been for our red trend line to finally pull back and touch the blue trend line during a sideways consolidation. (** The red trend line is a 6 weighted moving average, and the blue is a 12 simple moving average.)
This Bull market has been no different because the trend lines have been merged. So, this model was saying that we are at that "old familiar place" once again.
Well, that was until this morning at 9:30 AM when the September monthly tick began. If you look closely (at the chart below), you will see that the red trend line was below the blue at 9:30 AM.
Is this a problem?
See the next chart ...
Is this a problem? Continued below ...
Actually, it may not be a problem if you look at what happened at the same level in 1998. That chart is below and the October area is what is similar this September's time period.
During that 1998 period, the S&P actually made a lower/low during the second week of the month. When that happened, the red trend line fell below the blue trend line. So, it looked like today's chart above ... except that the third week reversed the monthly condition in 1998 to where the red trend line went back above the blue trend line. The Bull market continued from on from that point.
So, what does all the above all mean? Continued below ...
So, what does all the above all mean?
It means that it is too early to tell on a monthly tick chart. So far, the pattern behavior is not much different than Bull markets of the past.
Granted, economic conditions appear to be very different. Most disturbing is the fact that debt levels have not been adequately purged yet. Most encouragingly (economically at least), is the fact that the Fed is keeping rates low with the intent of keeping liquidity flowing.
So, how will this one play out?
The real question at this level still remains: "Will the current Bull market now END and turn into a Bear market, or will it continue on and make new highs?"
This is an important, historic area.This is a monthly chart, so each bar represents one month of time. Historically, the process at this juncture has taken three to five months to resolve. This one has been going on for a while, so this month (September) is when the question should be resolved.