Bull-Bear Market Indicator Archives - Page 2 of 2

April 5, 2025

US Weekly Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

Our Bull/Bear Market indicator has fallen to 40%, with three of the five leading indicators now signaling risk-off:

Bull-Bear Market Indicator

Heavy truck sales fell to 33.6K units in March, with the 3-month moving average declining more than 15% from its July 2023 high, warning of a recession.

Heavy Truck Sales (Units)

Stock Pricing

Stock pricing eased slightly to 95.09 from a high of the 97.79 percentile six weeks ago. The extreme reading warns that stocks are at risk of a significant drawdown.

Stock Market Value Indicator

The Stock Pricing indicator compares stock prices to long-term sales, earnings, and economic output to gauge market risk. We use z-scores to measure each indicator’s current position relative to its history, with the result expressed in standard deviations from the mean. We then calculate an average for the five readings and convert that to a percentile. The higher that stock market pricing is relative to its historical mean, the greater the risk of a sharp drawdown.

Conclusion

We are now in a bear market, with the bull-bear indicator falling to 40%. Stock pricing remains extreme, warning of the risk of a significant drawdown.

Acknowledgments

- Multpl.com: Shiller PE Ratio
- S&P Global: S&P 500 Sales and Earnings Estimates
- University of Michigan: Survey of Consumers
- Federal Reserve of St Louis: FRED Data

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

March 29, 2025March 29, 2025

ASX Weekly Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 54%, with three of six leading indicators signaling risk-off, while the US bull-bear index (a 40% weighting) is at 60%:

Bull-Bear Market Indicator

The ASX 200 continues in a strong downtrend relative to the gold price in Australian Dollars.

ASX 200 Index Relative to Gold in AUD

The ASX 200 Financials Index (XFJ) is retracing to test resistance at 8500, but remains in a primary downtrend.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing increased to the 76.18 percentile compared to 74.05 two weeks ago, and a high of 85.83 in February.

Stock Market Value Indicator

Conclusion

The ASX bull-bear indicator at 54% indicates a mild bear market.

We are entering a bear market, and the risk of a significant drawdown is high.

Acknowledgments

NAB Monthly Business Survey: January 2025
ABS: Private Dwelling Approvals
Trading Economics: China Business Indicators
Morningstar: ASX All Ords & ASX 20 Statistics
Market Index: ASX Statistics
ABS: National Accounts
ASX: Historical Market Statistics

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

March 29, 2025March 29, 2025

US Weekly Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

Our Bull/Bear Market indicator is unchanged at 60%, with two of the five leading indicators signaling risk-off:

Bull-Bear Market Indicator

We replaced the Coincident Economic Activity Index with Current Economic Conditions from the University of Michigan’s monthly consumer survey. The UOM index offers earlier recession warnings—when the 3-month moving average crosses below 100—and more timely updates.

University of Michigan: Current Economic Conditions

The current reading of 68.20 is a strong bear signal. The Fed Funds target rate is also in a bear cycle, but the two require confirmation from one of the following two indicators:

If the Chicago Fed Financial National Conditions Index rises above -0.40.

Chicago Fed National Financial Conditions Index

Or the S&P 500 30-week Smoothed Momentum crosses below zero.

S&P 500

Stock Pricing

Stock pricing eased slightly to the 95.67th percentile from a high of 97.79 six weeks ago. However, the extreme reading still warns that stocks are at risk of a significant drawdown.

Stock Market Value Indicator

Conclusion

There’s little change this week. We are close to a bear market, with the bull-bear indicator at 60%. Stock pricing is still extreme, highlighting the risk of a significant drawdown.

Acknowledgments

- Multpl.com: Shiller PE Ratio
- S&P Global: S&P 500 Sales and Earnings Estimates
- University of Michigan: Survey of Consumers
- Federal Reserve of St Louis: FRED Data

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 8, 2025February 11, 2025

US Weekly Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The Bull/Bear Market indicator rebounded to 60%, due to data revisions to heavy truck sales. Two of the five leading indicators now signal Risk-off:

Bull-Bear Market Indicator

Heavy truck sales were revised up to a seasonally adjusted 37,823 units in December, after an earlier report at 35,152 units. January sales jumped to a hot 44,499 units confirming that economic activity is not slowing.

Heavy Truck Sales (units)

This is the second time that a heavy trucks data revision has affected our model. We will investigate using a 3-month moving average to reduce the impact of revisions.

Stock Pricing

Stock pricing eased slightly to 97.75 from the 97.91 percentile two weeks ago. The extreme reading continues to warn that stocks are at risk of a significant drawdown.

Stock Market Value Indicator

Conclusion

We are close to a bear market, with the bull-bear indicator revised to 60%. Stock pricing remains extreme, increasing the risk of a significant drawdown, warning not to increase exposure to risk assets like growth stocks.

Acknowledgments

Multpl.com: Shiller PE Ratio
S&P Global: S&P 500 Sales and Earnings Estimates

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 5, 2025January 5, 2025

Weekly Stock Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The Bull/Bear Market indicator remains at 60%, with the two yield-curve indicators signaling Risk-off:

Bull-Bear Market Indicator

The Fed is cutting interest rates which usually flags a bear market.

Fed Funds Target rate: Mid-point

However, financial market conditions remain ultra-easy. Also, the coincident economic index (below) held above its 2.5% threshold in November, heavy truck sales are robust, and employment in cyclical sectors is close to record highs.

Coincident Economic Activity

Stock Pricing

Stock pricing eased to the 97.90 percentile from 97.99 last Friday. The extreme reading warns that stocks remain at risk of a significant drawdown. Stock valuations, however, give no indication as to market timing:

Markets can remain irrational a lot longer than you and I can remain solvent. ~ A.Gary Shilling (1986)

Stock Market Value Indicator

Conclusion

We are at the cusp of a bear market, with the bull-bear indicator at 60%, and stock pricing is extreme, warning of the risk of large drawdowns.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 30, 2024

Weekly Stock Market Snapshot

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The Bull/Bear Market indicator improved to 60% from 40% three weeks ago after a significant revision to November heavy truck sales data.

Two of the five indicators signal Risk-off:

Bull/Bear Market Indicator

The Fed has cut interest rates three times since August, which usually flags a bear market.

Fed Funds Target rate: Mid-point

However, financial market conditions remain ultra-easy, and the coincident economic index, while close to the 2.5% threshold, is still above water. Heavy truck sales remain robust, while employment in cyclical sectors is near record highs.

Cyclical Sectors: Employment

Stock Pricing

Stock pricing increased to the 97.99 percentile from 97.91 last Friday. The extreme reading warns that stocks are at risk of a significant drawdown.

Stock Market Value Indicator

Conclusion

We are at the cusp of a bear market, with the bull-bear indicator declining to 60%. Stock pricing is also extreme, warning of the potential for large drawdowns.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 23, 2024

Weekly Market Snapshot – bear signal

The above two dials provide a snapshot of our market view and attitude to risk.

Bull/Bear Market

The Bull/Bear Market indicator fell to 40% from 80% on Friday, November 9th.

The most recent bear signal is heavy truck sales, which plunged to a seasonally adjusted 32.5 thousand units in October 2024 from a peak of 46.1 thousand in May 2023.

Heavy Truck Sales

There are now three of five indicators signaling Risk-off:

Bull/Bear Market Indicator

Stock Pricing

Stock pricing remains in the extreme range, at the 97.67 percentile compared to 97.59 last Friday, warning that stock prices have the potential for large drawdowns.

Stock Market Value Indicator

Conclusion

We are headed for a bear market, with our allocation to risk assets declining to 40%.

Stock pricing is also extreme, warning of the potential for large drawdowns.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.