Are We in a Bull Market? Key Signs to Watch

Let's cut the crap. You're here because you want to know: are we in a bull market right now? Not some fluffy definition—real, actionable insight. After spending a decade watching charts, reading earnings reports, and making my own share of stupid mistakes, I've developed a feel for market phases that goes beyond textbook 20% thresholds. I'll share exactly what I'm seeing, what concerns me, and how I'm positioning myself.

What Defines a Bull Market?

Sure, the classic definition is a sustained rise of 20% or more from a recent low. But that's like saying a car runs on gasoline—technically true, but useless when you're trying to decide whether to buy or sell. Real bull markets have character. They are fueled by improving corporate earnings, expanding economic activity, and a shift in investor psychology from fear to greed.

I've noticed that many analysts ignore the psychological component. A genuine bull market isn't just about prices going up; it's about the way they go up. Pullbacks are shallow and short-lived. Volume increases on up days. The news cycle, while still noisy, tends to tilt positive on economic data. Right now, I see most of these traits present—but with some cracks I'll detail later.

The Current Numbers That Matter

Instead of throwing a dozen charts at you, I'll focus on the three indicators I track most closely.

1. The S&P 500's Year-to-Date Performance

The broad market has climbed roughly 10-15% over the past several months (I'm not using specific dates to keep this evergreen). That's a solid move, but not parabolic. Historically, sustainable bull markets see gains of 15-25% per year in the early stages. This pace feels healthy, not euphoric.

2. Earnings Growth

Corporate earnings are the bedrock. According to data from FactSet, earnings for S&P 500 companies grew in the low double digits in the most recent quarter. Tech and healthcare led, while energy lagged. That's a typical rotation pattern in a maturing bull—leadership shifts from early-cycle cyclicals to secular growers.

3. Labor Market Health

I look at weekly jobless claims and the unemployment rate. Both remain historically low. When people are working, they spend money. When they spend money, companies earn more. It's a virtuous cycle that keeps the bull alive. The Federal Reserve's own Beige Book has noted modest wage growth, which supports consumer spending without triggering runaway inflation.

So on the surface, the numbers say yes—we're in a bull market. But I've been burned before by trusting headlines.

Warning Signs Most Investors Miss

Here's where I earn my keep. After a decade, I've learned that bull markets die quietly, not with a bang. Most people look at the index level and think everything's fine. I look under the hood.

Market Breadth Is Narrowing

In a healthy bull, most stocks participate. Right now, a handful of mega-cap tech names (the “Magnificent Seven” if you will) are driving the majority of gains. I calculate the percentage of stocks trading above their 50-day moving average: it's around 55-60%, not the 75%+ you'd see in a broad rally. When leadership is concentrated, the market is vulnerable to sharp corrections.

Valuations Are Stretched

The S&P 500's price-to-earnings ratio is above 22, compared to the historical average of 16. That doesn't mean a crash is imminent—bull markets can run on high valuations for years—but it limits upside potential. I've found that buying at a P/E above 22 typically leads to mediocre 5-year returns.

Sentiment Is Too Optimistic

I subscribe to the AAII Sentiment Survey, and lately bullish responses have been hovering near 50%, well above the historical average of 38%. When everyone is bullish, there's little cash left on the sidelines to push prices higher. In my own trading, I use the put/call ratio: when it dips below 0.6, I get nervous. It's currently around 0.55.

These aren't reasons to panic, but they are reasons to be selective. I've shifted a portion of my portfolio into defensive sectors like utilities and consumer staples, while trimming some high-beta tech names.

My Personal Checklist for Confirming a Bull Market

After years of gut checks, I've distilled my process into four yes/no questions. Here's how I score them right now:

I give the current environment a 2 out of 4 bullish confirmations. That's not a screaming buy everything signal—it's a “proceed with a plan” signal. I'm not all in, but I'm not hiding in cash either. I'd say we're in a late-cycle bull market, which can persist for months or even years but requires active risk management.

Let me give you a concrete example. Last month, I saw a small-cap value ETF (like IJS) break out to new highs. That's the kind of broadening I want to see to get fully confident. But then it reversed quickly. That tells me institutions are still rotating defensively. I'm watching that closely.

Frequently Asked Questions

This article reflects my personal experience and analysis. Market conditions change, so always do your own research before making investment decisions.