After a brutal (and long) bear market, it looks like the bear market is almost over. What a relief!
It was tough to watch losses pile up in the Nasdaq, Russell 2K, and SPX 500 during 2022. While I believe we are still in a bear market for technical reasons, there sure is evidence that it won’t be for too much longer.
Bull market signals abound
The Nasdaq has had a spectacular move in 2023, rising up more than 44% to date. The SPX 500 has also shared in the wealth by jumping 19% so far this year. But it’s the broader Russell 2K that has made the biggest move since the start of June. That alone tells me that bullish moves will continue to happen – all the way towards all-time highs.
I simply could not get on board with the bulls earlier this year until my preferred signal for a bull market was triggered. That indicator is the MACD on the monthly chart of the SPX 500. (MACD stands for moving average convergence/divergence.) It’s a simple signal: The thick black line (slower moving average) needed to cross above the faster moving red line to confirm the next bar.
We nearly had a crossover at the end of June, and it appears we will have one for July. If we get one more month in this crossover space (August), that would cinch a change to a bull market condition. At that point, we can fully breathe a sigh of relief. Though you can make money in a bear market, a bull market is much easier to navigate.
This is how I know the bear market is almost over
I mentioned that indices are very close to achieving new all-time highs. Momentum is strong enough to carry the markets higher, but one indicator tells a more complete story. The cumulative volume breadth (CVB) was very close to reaching an all-time high last week. It should hit that high within days. If it does, we can expect to see new all-time highs for the market indices.
This could happen in a very short time. The SPX 500 is 5% away from its all-time high, while the Nasdaq is only 6% away. What is a short time frame? It could be a couple of weeks or months, but with volatility so low and a lack of fear when the markets go down, I definitely see a path here to a bull market. But pay attention, this bear won’t go away quietly!
