SPX S&P 500 Monthly and Daily and NYA NYSE Composite Weekly Charts Explaining Cyclical Bull Versus Cyclical Bear Markets

Here are 3 of Keystone's key indicators for identifying cyclical bull and bear markets for stocks and indexes. The -20% bear market metric is not useful but it makes for good television, attracting eyeballs, which drives up ad revenue. The silly metric sent the United States in and out of a bear market 5 times on Friday, yesterday it was a cyclical bull market but maybe today back to cyclical bear. It is silliness.

The number one metric for determining cyclical bull verses bear markets is the SPX 12-month MA cross. It is the bible and the chart clearly shows the cyclical bear as the pandemic hit in early 2020. The government started handing out money (fiscal stimulus) to every Tom, Dick and Harry and the Federal Reserve provided more monetary stimulus so it was off to the races. The cyclical bull market was reborn. Alas, the all-time high in the stock market occurs early January and stocks collapse ever since.

The NYA 40-week MA cross is another key metric and it is used in conjunction with the SPX 12-mth MA cross to absolutely confirm a cyclical bull, or cyclical bear. Right now, they absolutely confirm the ongoing cyclical bear market. The SPX is below the 12-month MA and the NYA is below the 40-week MA.

Another handy tool for distinguishing between bull and bear markets is the SPX 150-day MA slope. The chart clearly shows the happy cyclical bull market continuing into the new year but then in February the 150-day MA peaks. The moving average then begins the trek lower to the present day confirming that the US stock market is in a cyclical bear market pattern. This is a good tool to use for the entire portfolio.

For example, if long a ticker, and the 150-day MA is sloping down, you will be losing money. A prudent strategy is likely to sell out of the position on the rallies going forward. Conversely, there is comfort in the long trade if the 150-day MA continues higher.

So ditch the -20% bear market nonsense and use the 3 useful indicators above when assessing indexes and individual stocks. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.