So far, no signals of a bull market top

5 signs generally indicate when stocks are peaking. None are apparent now, says an Oppenheimer analyst.

By MSN Money Partner Jul 21, 2014 1:25PM
Credit: © Image Source/Corbis
Caption: Bull and Bear MarketsBy Myles Udland, Business Insider

Ari Wald, a technical analyst with Oppenheimer, is out with a note Monday that outlines five signals that indicate a bull market top.


"As it stands," Wald writes, "we think the absence of these signals argue against an imminent end to the cycle."


The signals, per Wald, are:

  • Moderation in the S&P 500's uptrend.
  • Signs of distribution and narrowing participation.
  • Prolonged period of elevated volatility.
  • Sustained breakdown in the 10-year U.S. Treasury yield.
  • Spike in the price of WTI crude oil futures.
Of the arguments Wald outlines in favor the bull market not indicating a top, we think the volatility measure bears close watching.

This chart from Wald shows the relationship between the S&P 500 and the VIX, with bull market peaks typically not coming from low VIX readings. 


We've written a lot about volatility through the spring and early summer, and written mostly about the absence of volatility.


Last week, following the news of the Malaysia Airlines plane crash in Ukraine, the VIX, or volatility index, spiked higher by more than 30 percent.

 

The next day, the VIX gave up most of these gains. It seems that unless this trend changes, the current bull market should remain intact. 


More from Business Insider


9Comments
Jul 21, 2014 5:35PM
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As if a market top is a bad thing. If you are a buyer don't you want to buy lower rather than higher?
Jul 22, 2014 11:28AM
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A major Obamacare ruling!   The TAXPAYER win one for a change!  No subsidies on the Federal exchanges, just like the clearly states and meant. About time Obama is stopped from rewriting laws to his own liking!
Jul 22, 2014 11:28AM
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So you think they're going to ring a bell?
Jul 22, 2014 10:27AM
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"So far, no signals of a bull market top"


Words spoken just before all Market Tops in the Past. There are plenty of Signals if you don't have your Head Stuck in the Sand. However, this time around, the Global FEDS keep plugging the gaping Holes with more Crack Dollars. Over $10Trillion and counting from just three Central Banks alone. Just how long do some folks think this can last? Economies go in and out Booms and Busts, what do the Global Feds have left for the next Major Downturn.

Jul 21, 2014 3:54PM
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Look Again... QEIII is nearing an end (down to 35B/month from 85B/month).  Without top line growth (adjusted for money printing), and REAL demand, it unlikely the market can sustain these levels.  Already you see negative growth in the first quarter, and large companies laying off thousands at a time (MSFT, 18,000, etc).  I suspect we will stagnate and see sub 1.2% growth in the 2nd quarter, and likely sub 2% for the entire year.


Wait till the rest of the Obamacare taxes kick in, and the Obama tax hikes continue to slow the economy. 


I like to be optimistic, but under Obama it is best to sit on the sidelines.  Only two more years of this. 

Jul 22, 2014 9:52AM
Jul 22, 2014 9:09AM
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"No sign of a bull market top"...

History says that's ALWAYS the sign that the top was surpassed long ago by manipulation and the drop starts at that point, not the controlled top. A reminder that QE kicked in just south of 9,000 and the DOW is now comprised of platforms and con artists like Goldman Sachs, not Industrials that employ a substantial number of our workforce. 
Jul 21, 2014 8:22PM
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The VIX is a rather notable indicator, probably the SKEW also...?

I just know very little about the latter..

And have tracked or charted the VIX for about 10-12 years, along with others.

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