Not so fast, market bulls.
In this sneak peek from the Action Alerts PLUS investing club, AAP team member and market technician Bob Lang said a look at the monthly chart of the S&P 500 coupled with the MACD must signal a bullish crossover before he will call a bull market.
Find out what that means and when he thinks it could happen in the video above.
FULL VIDEO TRANSCRIPT BELOW:
J.D. DURKIN: Bob, I love this current debate about whether or not we are, in fact, in a bull market. If we are in one, it's certainly one that does not look like previous bull markets and is not one that will look like future bull markets. We have had multiple pullbacks of 5% or so over the course of the year.
But despite overall the recent market strength, much like our friend Chris Versace, you are not quite ready to call this a bull market. What are you waiting to see before you can officially say, we're in a bull market, and I'm ready to give it the Bob Lang stamp of approval?
BOB LANG: Yeah, so I look at the technicals obviously, J.D., every single day. And the one technical that has worked for me over the years is watching the monthly chart on the S&P 500, coupled with the MACD, which is the Moving Average Convergence/Divergence, which basically shows the changing trajectory of a price of a stock or an index before it happens, not afterwards. So when we get this bullish crossover move on the MACD and we get a confirming bar on the next one, that tells me that we have a change in market environment, in market landscape, either bullish or bearish. And I can prepare for myself to play in that particular environment.
Well, the end of June was last Friday, of course. And we almost nearly had that crossover happen. It's been months in the making here, but we didn't quite get there.
So what I would need to see is another positive month, or at least moving average convergence/divergence moving positively at the end of July and then a confirming bar or a confirming move at the end of August. So for me, the earliest time we would be able to see a bull market start would be the beginning of September. And of course, that leads into some very difficult trading conditions. We often see historically seasonal patterns are weak in September and October.
So I'm going to say June was a just-miss and changing to a bull market or possibly a bull market. But we still have a chance the next couple of months lead us upwards.
