Based on the Medium-Long Term Model, this bull market probably has 1 year left. We can confirm this theory through the stock market’s recent price action.

The final rally of a bull market is often marked by “downwards reversal days”. In other words, the market gaps up on the open (exuberant buying) and then falls throughout the rest of the day. We just saw a “downwards reversal day” yesterday in the NASDAQ.

The NASDAQ gapped up almost 1% on the open and then closed below the previous day’s close.

Here are all the historical cases in which the NASDAQ gapped up at least 0.9% and then closed below the previous day’s close.

Click here to download the data in Excel.

As you can see, all of these historical cases occurred in the final year of the NASDAQ’s bull market (1999). In addition, notice how the NASDAQ has a tendency to fall during the 1 week after this “downwards reversal day”.

Here’s what happened next to the S&P 500 during these historical cases.

Conclusion

We are most likely approaching the final year of this bull market. The stock market is starting to exhibit signs that are characteristic of the last rally in a bull market.

However, it’s important to remember that double-digit gains are common in the final year of a bull market. Getting out too early is just as bad as getting out too late. We are not near the top yet.

Click here for more market studies.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.