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How to Spot the Bear Lurking in This Current Bull Market

Stocks in this article: SH

Some sectors of the economy, like health care and energy are flourishing right now, while there are other sectors like consumer discretionary that are clearly struggling. Of course, the health care sector is currently receiving stimulus in the form of subsidized health insurance. It is a good thing to follow stimulus around.

By keeping an eye on corporate earnings we can gain important information about the overall health of the economy.

#3 - Is this market getting expensive?

Back in 2000, the market was trading at a multiple of 30 times forward earnings. Where are we today? The market multiple is only 17.29 on an average forward PE basis using the 3,800+ stocks in my Best Stocks Now database. We began the year at a multiple of 18.58. So the market is not "cheap" but it is not expensive either.

#4 - Are the technicals of the market beginning to roll over or are they still in an uptrend?

By carefully analyzing the price trends in the market, the overall health picture of the market becomes much clearer. As you can see from the chart of the S&P 500 above, you can see that the primary trend of the market is still up. This is another name for a bull market.

#5 - Which asset classes and sectors are leading the market?

It is also important to track the different asset classes in the market. As we look at the leading asset classes currently (I track 34), equities still dominate the top spots.

Data from Best Stocks Now App

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We can also get a clue from the sectors leading the market. Is it the defensive sectors leading the market or is it the offensive sectors? As we look at the leading sectors right now (I track 60), it is still growth sectors leading the way.

Data from Best Stocks Now App

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