{"id":845431,"date":"2025-05-03T09:11:54","date_gmt":"2025-05-03T14:11:54","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/05\/03\/looking-at-a-cyclical-bull-market\/"},"modified":"2025-05-03T09:11:54","modified_gmt":"2025-05-03T14:11:54","slug":"looking-at-a-cyclical-bull-market","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/05\/03\/looking-at-a-cyclical-bull-market\/","title":{"rendered":"Looking at a cyclical bull market"},"content":{"rendered":"
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Let\u2019s start this Friday off by sifting through the noise, providing some perspective (as opposed to freaking out after watching an episode of your favorite political news<\/a> (ahem\u2026 entertainment) station.\u00a0 J<\/span><\/p>\n

Below is the S&P500 in the upper pane, and the Volatility Index (VIX) in the lower pane.\u00a0 I drew a horizontal red line at 40, because the VIX doesn\u2019t cross above\/below 40 very often.\u00a0<\/span><\/p>\n

In fact, you have to squint to see these crosses in 2010 and 2011, but here\u2019s the point\u2026<\/span><\/p>\n

There have only been 7 times in more than 25 years that the VIX crossed above\/below 40, and when it did, it marked pretty close to the bottom of the market when the S&P500 was in a cyclical bull.\u00a0<\/span><\/p>\n

However, when you look at 2000-02, you can see that during a cyclical bear market, this signal did NOT mark the bottom.<\/span><\/p>\n

So, ask yourself\u2026 \u201cAre we in a cyclical bull market \u2013 or are we in a cyclical bull market?\u201d\u00a0<\/span><\/p>\n

<\/p>\n

I\u2019m seeing a lot on the internet about the outperformance of international stocks vs. U.S. stocks these days, and there are two things I don\u2019t like about it.<\/span><\/p>\n

First off, every investor has their own timeframe, and this outperformance is currently short-term, not intermediate or long-term.\u00a0 So unless you\u2019re a short-term trader, this shouldn\u2019t mean much to you right now.\u00a0<\/span><\/p>\n

The problem is, most investors don\u2019t understand their own timeframe, and many of those posting on social media who are calling on International Stocks to be the new market leaders don\u2019t trade with real money. \u00a0\u00a0Rather, they merely share their opinion or analysis<\/a>.<\/span><\/p>\n

With that, here\u2019s a chart<\/a> of the relative strength (RS) relationship between the S&P500 and the All Country World Index Ex-US (ACWX) with a 150-day moving average (150MA).\u00a0<\/span><\/p>\n

When the chart is trending up and to the right, the trend is up and in favor of U.S. stocks.\u00a0 When it\u2019s trending down, international stocks are in favor.\u00a0 I add the 150MA to all my RS charts just to have a line-in-the-sand that determines whether RS is trading above or below that line, and whether the line itself is sloping up or down.<\/span><\/p>\n

<\/p>\n

It looks like international stocks are truly outperforming, doesn\u2019t it?!\u00a0 Well\u2026 what if we zoom out (see below)?<\/span><\/p>\n

As you can see, if we go all the way back to the bottom of The Great Recession, the RS relationship between U.S. and International Stocks has done what it\u2019s doing\u00a0<\/span>right now<\/strong><\/b>\u2026 MANY times before!<\/span><\/p>\n

So, is this the real thing this time, or is this just another head-fake?<\/span><\/p>\n

For me, I would need to see the RS chart climb back up toward the 150MA, try to get \u201cabove water\u201d (i.e., above the blue 150MA line), and fail, heading back down again, printing a new, lower-low \u2013 and for now, that simply hasn\u2019t happened yet.<\/span><\/p>\n

<\/p>\n

As for the U.S. stock market\u2026 just wow!\u00a0 What a difference a month makes.\u00a0 If you went into cryo-sleep on April 1<\/span>st<\/span><\/sup>\u00a0and woke up on May 1<\/span>st<\/span><\/sup>, almost nothing would\u2019ve happened \u2013 stock prices would\u2019ve been in (roughly) the same place they were a month ago!<\/span><\/p>\n

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  1. While we spent some time in the\u00a0<\/span>\u201cDANGER Zone\u201d<\/strong><\/b>\u00a0this past month, the stock market is right back in the\u00a0<\/span>\u201cCaution Zone.\u201d<\/strong><\/b><\/li>\n
  2. The bottom of the\u00a0<\/span>\u201cCaution Zone\u201d<\/strong><\/b>\u00a0still resides at the spring 2024 lows, which took place after a market correction of just over -10% (sound familiar \u2013 this is happening now!),<\/span><\/li>\n
  3. \u2026and the\u00a0<\/span>\u201cDANGER Zone\u201d<\/strong><\/b>\u00a0still sits just south of 5,000 on the S&P500.<\/span><\/li>\n<\/ol>\n

    <\/p>\n

    It\u2019s difficult to see, but the S&P500 rose off the early-April lows, pulled back, and then headed higher again, which resulted in a \u201chigher-low\u201d \u2013 or in other words, we find ourselves in the midst of a short-term uptrend.\u00a0 The question is, \u201cWill it hold?\u201d<\/span><\/p>\n

    I think it will\u2026 and for several reasons:<\/span><\/p>\n