How to know when this stock market bull run is over

With the S & P 500 making new highs seemingly every week and now up more than 25% from its October low, a common question from clients has been, “How long can this possibly continue?” No one knows that answer, but we’re going to cover three extremely important traits that the market must maintain for the uptrend to persist: Successful bullish patterns High frequency of good closes Consistently strong market breadth Successful bullish patterns The key to any uptrend is seeing bullish chart patterns form, fire and achieve their upside targets. Needless to say, this has been happening in droves since the fall 2023 low. Quite simply, uptrends are built by successful patterns. A pattern is deemed successful by an index, ETF or stock completing these seven steps: Hold support Follow through Form a higher low Construct a bullish pattern Break out Achieve its upside target Repeat steps 3-6 The S & P 500 has had four successful patterns since the October low, each of which is displayed on this chart. As is clear, they’ve varied in size and duration, but each time, the S & P 500 broke out, extended and hit its target, regrouped and repeated the process. The S & P 500 just achieved its last upside target of 5,180 a few days ago. Currently, just one live bullish pattern remains – a huge one, with a target up at 6,100. We use the measured move strategy to get this objective – simply adding the height of the pattern to the breakout zone. Here is each bullish pattern in table form. A key feature is none of the breakout zones were violated, which kept the upside objectives in play. High frequency of good closes As the saying goes, finishing well is better than starting well. This is especially true for the trading day. The collective willingness of traders to buy at higher prices throughout the day tells us they are confident that even higher prices are coming. Thus, it’s a bullish sign when the market closes above its mid-point. The S & P 500 has closed above its own intra-day midpoint 80% of the time since October lows. That’s an extremely high win-rate. The index’s longest streak of “good closes” (closes above the mid-point) since the October lows has been nine. Further, it has had streaks of at least three straight good closes eleven different times. Conversely, the longest streak of bad closes has been just three, which has happened only twice. Consistently strong market breadth Market breadth (or internals) can be measured different ways, but simply tracking the percent of stocks advancing every day is both the simplest and most useful. From this perspective, the S & P 500 has had positive internals 70% of the trading days since the October lows. It’s been even more pronounced recently, with the index flashing positive breadth 80% over the last four weeks. That’s helped the S & P 500’s Cumulative Advance – Decline Line match the index and continue to make new highs. This is despite the notion that the Mag 7 is solely responsible for the market-wide advance. Indeed, they’ve been a big part of it, but stocks from many other sectors and industries have participated, and this is a clear example of that. We should understand this: the S & P 500 only has had three 90% days since the comeback (11/14, 12/13 and 12/21), so the extreme breadth days have been rare. It’s more important to see consistently “solid” breadth. That’s been happening, and we see the result. Lastly, we track these three traits (among others) to give us a sense of the market’s character. Eventually, each will stop working. By that time, the top already will be in. Thus, we’ll never identify the top before it happens. However, keeping close tabs on the market action in this way identifies a major trend shift as it’s taking shape. And that’s what we care about most. DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.