These 2 ‘Perfect’ Indicators Say the Bear Market Is Over

  • The advancing volume indicator -- when over 85% of the S&P’s daily trading buying volume on two of three consecutive trading days happens within 30 days of the index’s 52-week low, you always get a rally in stocks over the next year.
  • And in July, two had buying volume account for more than 85% of total trading volume.
  • In bonds, high-yield spreads have collapsed recently.
  • Such collapses are rare -- and exceptionally bullish.
An image of a bull and a bear facing off; bear market and bull market
Source: Jackie Niam / Shutterstock

[Editor’s note: “These 2 ‘Perfect’ Indicators Say the Bear Market Is Over” was previously published in July 2022. It has since been updated to include the most relevant information available.]

Though we’ve had our down days, stocks have been soaring recently. And it’s starting to feel like the nasty bear market of 2022 may be over.

Over the past month, the Dow Jones is up almost 7%. The S&P 500 is up about 5%, and the Nasdaq’s up nearly 8%. Meanwhile, over that same stretch, growth stocks have soared about 20%!

So, is this really the end of the 2022 bear market? Or is it just another head fake that will ultimately result in more pain ahead?

Well, according to two ultra-rare stock market indicators with unwavering track records, this could finally be the long-overdue end.

If it is, we have the best group of stocks for you to buy right now. They’re stocks that we believe could double over the next 12 months alone.

Let’s take a deeper look.

Bear Market End: Advancing Volume Indicator Just Flashed “Buy”

One of the indicators I’m referring to is something known as the advancing volume indicator.

According to this, bear markets end when a streak of heavy buying days closely follow a big crash. Specifically, when over 85% of the S&P’s daily trading buying volume on two of three consecutive trading days happens within 30 days of the index’s 52-week low, you always get a rally in stocks over the next year.

This unique phenomenon has occurred 13 times over the past 50 years. And each time, stocks were higher a year later. The average gain? Nearly 25%.

In other words, this is a bullish indicator with a perfect track record. And it doesn’t just call the end of bear markets — it forecasts 20%-plus market breakouts.

Well… guess what happened?

This indicator flashed a “buy” signal for the first time since the COVID-19 crash’s final stages in 2020. Indeed, back in July, two had buying volume account for more than 85% of total trading volume.

Chart showing S&P 500
Source: SentimentTrader

Historically, this means the current bear market is either over or very close to it. And what comes next is a 20%-plus melt-up in stocks.

We think that’s exactly what will happen.

Is your portfolio positioned for this massive rebound?

Bond Market Flashes Its Own 100% Accurate “Buy” Signal

The bond market also flashed its own bear-market bottom buying signal with a perfect record of predicting positive gains.

In bonds, high-yield spreads have collapsed in the recent weeks. They’re down about 85 basis points.

Such rapid collapses in high-yield bond spreads are rare. They’re also bullish.

Since 2010, high-yield bond spreads have compressed nearly this quickly (75 basis points or more in three weeks or less) on nine separate occasions. Each time, the market rose over the next six and 12 months. The average gain over the subsequent 12 months? More than 20%.

Chart showing CDX HY spread

In other words, widely followed bond-yield spreads flashed the most convincing buy signal they could. And that signal indicates stocks will rally more than 20% over the next 12 months.

If your portfolio isn’t positioned for a massive market rebound in 2023, you need to make some major adjustments today!

The Final Word on the End of the Bear Market

We’re seeing lots of signals indicating that the stock market is in the midst of a generational turnaround.

That’s big news.

You know when fortunes are made in the stock market? During generational turnarounds from bear to bull markets.

Last time it happened was 2020. In that year, Tesla (TSLA) stock rose 743%. NIO (NIO) stock surged 1,103%, and Blink Charging (BLNK) rose 2,332%.

Before that, we had a generational turnaround in 2009, after the Great Recession. In that year, Compugen (CGEN) stock rose 1,027%. Avis Budget (CAR) climbed 1,748%, and Sleep Number (SNBR) popped 2,407%.

And before that, we had a generational turnaround in 2003, after the dot-com crash and subsequent recession. In that year, FARO Technologies (FARO) popped 1,194%. 8×8 (EGHT) rose 1,922%, and Axon (AXON) stock surged 1,933% higher.

You get the point.

When the market enters a turnaround like this from a bear to a bull market, investors are presented with a plethora of 10X investment opportunities.

Fortunes are made in these turnarounds. Are you prepared for the one coming in 2023?

If not, I highly suggest you learn how to prepare with potential 10X picks.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.


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