End of Bull Market – Bear Signs

It has been more than five years since the Dow Jones reversed its trend from the financial crisis. The long bullish market is extremely optimistic and market participants are starting to ask how long will it last.

Very few people if any, would be able to certainly put a date on the end of the bull market but for those getting nervous I will be good to keep an eye on possible signs that the trend is close to end. The number equities retreating to new low increases.

Do you think that the Dow Jones will soon turn bearish?

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End of Bull Market or Bear Signs:

  1. P/E ratios: are used to gauge whether shares look expensive or cheap by comparing prices to earnings. In March 2009 P/E ratios where high and equities were looking undervalued. Now P/E ratios are more in line with the average  and starting to looking overvalued and overbought.
  1.  Copper price: Copper prices are trading in a dangerous position, in the immediate recovery from the financial crisis copper prices increased in 2011. Since then, its price charts has created a number of lower highs indicating that demand for the commodity is diminishing. Copper is trading bellow the 200 moving average and just below a historical support level.
  1. Consumer Confidence: Consumer confidence in the U.S have been ranging at the lower level for decades. It doesn’t mean that there is more room for consumer to get more confident ;even if it has increased in recent years it is still below average. Since November 2013 U.S consumer confidence has declined.

                Precisely rising confidence and high confidence usually leads to the begin of a correction.

  1. Higher leverage or margin debt: In February 2014 Global Research reported an increased in margin debt by $21 billion to an all-time high of $445 billion.

  1. Advancing vs Declining Stocks: During healthy bull markets basically all or most companies prices move higher, only companies with fundamental sound problems tend to lag behind. In a old bull market the stock market tend to climb higher and then drops, usually influence by news on few blue ships that are keeping the market afloat.

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