As we observed recently, the current stock market bubble is one of the largest of the past 100 years. Further, at a current duration of nearly eight years, the cyclical uptrend from 2009 is long overdue for termination. Although the S&P 500 index has moved up to new all-time highs, the advance from 2016 is almost certainly a speculative blow-off move and it remains likely that a long-term top is in the process of forming.

As we often note, because bubbles are highly irrational by nature, predicting the timing of their collapse with any useful degree of statistical confidence is nearly impossible. However, careful analysis of market data can indicate when a bubble has become vulnerable. For example, the negative divergences that have been developing between price behavior and market internal data such as volume and breadth continue to signal caution.

From an intermediate-term perspective, at a current duration of 14 weeks, the rally phase of the cycle from November will likely terminate sometime during the next three weeks.

Although intermediate-term cycle translation remains bullish, it will be important to monitor the character of the forthcoming decline phase given the weakness in market internal data. A brief, shallow decline into the next intermediate-term cycle low (ITCL) would suggest that the bull market is still in progress, while a severe decline would favor the topping scenario.