Market Watch: A Stock Market Bear Signal is at a More-than-4-decade High, Says Goldman

Article by Mark DeCambre on WSJ MarketWatch

A gauge of bullish and bearish momentum in the U.S. stock market is ringing alarms for strategists at Goldman Sachs.

The investment bank’s so-called bull-bear indicator, which examines five market factors, indicates that the likelihood of a bear market occurring is at its highest point since around the mid-1970s (see chart below).

Goldman analysts led by Peter Oppenheimer, chief global equities strategist, said an unusual period for Wall Street, characterized by loose monetary policy and a recent spate of fiscal stimulus has resulted in an uncannily bullish cycle for markets that is likely to come to a screeching halt.

The report comes as U.S. stocks have registered a decade-long, bull rally, making it the lengthiest period of equity-market prosperity.

A 20% decline for the market, representing the typical definition of a bear market for an asset, hasn’t occurred in years (see chart below), according to Goldman, and may be halting for investors that have grown accustomed to this current phase of mostly levitating markets.

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