Richard Russell: “One question I am frequently asked is, “How do we know when a bull market is topping out?” First, we must determine which sentiment phase the market is in. This is particularly difficult now because this market is being manipulated by the Federal Reserve. Normally, the stock market will only top out when it is in the speculative or third sentiment phase.
However, the best gauge as to which phase a bull market is in is the matter of values and sentiment. At this time I judge sentiment to be excited and optimistic. Nobody I read or hear is talking or writing about a bear market. On the matter of values, the S&P 500 is now selling at a rich 19.29 times earnings while the dividend yield is at a micro 2.10%. These statistics compare closely with values at previous bull market tops.
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