2000 and 2008 Bears Say Rally Done, 1929 and 1973 Might Agree

If the 2000 and 2008 bear market experience holds, this rally is done. It does not mean stocks drop immediately. In early July, I looked at the bullish percent indicator.

I saw a positive divergence on the indexes again and expected a rally. Now let's see if it has room to go. Here is the BPSPX for 2000, 2008 and current market:

There is a caveat: the data doesn't go back to the early 1980s or the 1970s. However, we can use BPSPX as a signal. The Nasdaq has been stronger in the rally, but has a much lower overall bullish percent though also in "overbought" territory. None of the prior bear markets produced bullish "breakouts" as bullish percent climbed. They all made lower highs.

I think there is one more push higher possible, but the March high holds. As soon as bullish percent rolls over, I will start becoming aggressively short if I cannot find any non-confirming signals from the price charts and indicators. Some other indicators: the PMO and 200-day moving average. There are some pushes above the 200-day EMA during declines, but they are brief.