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Big Picture

The bears have warned investors the US stock market has entered a structural bear. Plenty of negativity, including macroeconomic, geopolitical, and monetary uncertainties, to support the bearish calls.

The bulls are also unwavering in their belief this is a cyclical bear, trading within the confines of a longer-term structural bull. Supporting evidence centers on the following: central bank signaling inflationary pressures are subsiding, another two 25-basis points hike in the fed funds rate left in the FED tightening process, positive GDP growth, and robust job numbers suggest a soft landing rather than a hard landing.

Remember, economic numbers such as the GDP data are backward-looking, recording the state of the US economy three months ago.

The stock market, on the other hand, is forward-looking. It is a leading economic indicator and a better representation of where the economy will be in the near-distant future.

There is an inherent upward bias in US stocks, at least from a long-term perspective (i.e., many decades and centuries). It is not wise to bet against the long-term uptrend in stocks. However, there are times when investors must be cautious about the future stock market outlook. The market will often send out subtle signals to warn investors of a change in the long-term trend and shift in sentiment before the onset of a structural bear market.

The attached 100-year chart of the S&P 500 Index gives a big-picture view of the US stock market. A brief review of this chart shows US stocks remain in a secular or structural bull trend that began in earnest in May 2013 via a multi-year breakout above the prior 2007 all-time high of 1,576.09.


SPX has experienced a few volatile but relatively brief periods of market weakness, including the -35.41% Feb-Mar 2020 pandemic/recession bear and the current -27.54% Jan-Oct 2022 bear, before the resumption of the structural bull trend.

The attached 100-year chart of the S&P 500 Index gives a big-picture view of the US stock market. A brief review of this chart shows US stocks remain in a secular or structural bull trend that began in earnest in May 2013 via a multi-year breakout above the prior 2007 all-time high of 1,576.09.


There have been brief periods of market weakness, including the -35.41% Feb-Mar 2020 pandemic/recession bear and the current -27.54% Jan-Oct 2022 bear decline.


Two (2) cyclical bear declines over the past three (3) years may be the stock market’s subtle way of letting us know that it is alleviating an overbought condition and resetting the market to normal equilibrium before continuing with its structural bull.

In the past century, common traits of SPX secular bear markets are the following:

(1) Monthly RSI broke below 30-35

(2) Monthly PPO broke below zero

(3) Lack of all-time highs and a lower-low pattern

(4) SPX convincingly violates the 30-month and 40-month moving averages

(5) The trends of the 30-month and 40-month moving averages change from uptrend to flat-to-downtrend via a rolling of the monthly averages


In the past 100 years, common characteristics of SPX cyclical bear markets:


(1) Monthly RSI stays above 30-35.

(2) Monthly PPO maintains above zero

(3) Set all-time highs and higher lows

(4) Rallies above the 30-mo and 40-mo moving averages

(5) The trends of the 30-month and 40-month moving averages are flat-to-uptrend


The 10/13/22 low at 3,491.58 may be another cyclical bottom, ending the Jan-Oct 2022 cyclical bear decline and leading to the resumption of the May 2013 secular or structural bull. Although it may be too early to confirm this, the ability of the PPO indicator (1.564/3.178) to stay above the zero (0) level is constructive. Also, the RSI indicator (52.84) may have found support above 35. The ability of SPX to rally above the 30-mo ma (4,082.5) and the 40-mo ma (3,836) on a monthly closing basis hints at the continuation of the structural bull trend. The above longer-term bullish developments coupled with a recent breakout above the Jan 2022 primary downtrend and a golden cross daily buy signal (50-day ma crossed above the 200-day ma) further support the prevailing May 2013-present rally remains a secular/structural bull trend.

Although inflation, interest rates, the Fed, geopolitical, and macroeconomic concerns can abruptly change, triggering a dramatic shift in the above technical conditions, it remains best for long-term investors to respect the secular or structural bull in US stocks.

Source: Chart courtesy of StockCharts.com

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