CNBC: Bull Markets Often End With a Euphoric Rally Called a 'Blow-off Top.' We May Have Just Had One

Article by Fred Imbert in CNBC financial

The stock market's poor start to December halted in its tracks the kind of euphoric rally that has marked the end of past bull markets, a so-called blow-off top.

Between mid-August and late November, the was up 10.5% over the course of just 74 trading days in rapid move that seemed to be immune from any negative headlines.

According to Ned Davis Research, the Dow has posted a median gain of 13.4% during blow-off tops dating back to 1901. The median rally length was 61 days.

"Given the high valuations I see, plus these divergences between many different indices, I am aware that many bull markets have ended with a rally similar to what we have seen since August," said Ned Davis, founder of Ned Davis Research, in a note.

One rally similar to this one happened between Oct. 15, 1999 and Jan. 14, 2000, just before the dotcom bubble burst. The Dow rallied 17% over 64 trading days back then. Another one took place from Aug. 16, 2007 to Oct. 9, 2007, preceding the financial crisis. In that time, the Dow jumped 10.3% in just 38 trading days.

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