What a Dying Bull Market Looks Like

Editor's note: Stocks are hitting new highs practically every day.

But Steve Sjuggerud and Brett Eversole say today's bull market still has plenty of upside left.

In today's Masters Series – adapted from the May 30 and July 31 editions of our free DailyWealth e-letter – Steve and Brett share one indicator that suggests the "Melt Up" will continue... and explain why stocks could rise another 15% over the next three months alone...

What a Dying Bull Market Looks Like
By Steve Sjuggerud and Brett Eversole, True Wealth

Earlier this summer, thousands of listeners tuned in to hear Porter Stansberry and me talk about the day the bull market ends.

My take is that this market still has upside – and stocks still have room to run.

Why do I think this? In short, the market isn't "acting" like a market that's at the top yet...

The last truly great boom in U.S. stocks was the dot-com bubble of 1999. I expect this great boom in stocks will end in a similar way.

So how does today's market compare with 1999?

Almost any way you size it up, today's bull market has a long way to go on the upside before it resembles 1999...

One interesting way to compare them is through the "health" of the markets...

In a strong bull market, more stocks should be going up than going down – right? Sounds basic.

Well, what if the overall market was going up... but more stocks were falling each day than rising?

That's what was happening at the end of 1999.

You can see this in the chart below. The blue "advance/decline" line is a simple indicator... You take the number of stocks that went up in a day, and you subtract the number that went down. If more went up, this line goes up. If more went down, this line goes down. Take a look...

In a typical bull market, as the market goes up, the advance/decline line goes up too.

So what happened in 1998-1999 is interesting... The overall stock indexes were going up. However, more stocks were falling than rising.

That was not a healthy market. On the contrary – that's what a dying bull market looks like.

How does this compare with today?

Today's advance/decline line looks nothing like the late 1990s. Take a look...

Today's market is still "healthy."

The number of advancing stocks is still higher than the number of declining stocks each day. Based on this indicator, the market is not looking "weak" yet.

This isn't the only indicator I look at, of course. It's just one of many, showing a similar conclusion. This one isn't foolproof, either – it didn't give any advance warning at all in some market downturns.

Again, it's just one indicator... one piece of evidence among many that tells me we still have more upside ahead.

Yes, this is the second-longest bull market in history. No, it doesn't feel like a top – yet.

Meanwhile, the tech-heavy Nasdaq Composite Index – the leader during the last Melt Up – just saw a rare anomaly.

This rare event hasn't happened since February 2015. (Before that, it hadn't happened since 2009.)

History says it'll likely lead to big returns... Gains of 15% in just the next three months are possible. It's the next leg higher in the Melt Up.

We're in the late innings of a historic bull market. But the boom isn't over yet.

As we've explained... the biggest gains come in the last few innings... when the market "Melts Up" before suffering a major "Melt Down."

We're smack in the middle of the current bull market's Melt Up. But history says it's not over yet.

One reason is a rare anomaly that happened in the Nasdaq. The index recently moved higher for 10 straight trading days.

That's a rare feat. As I mentioned, it has only occurred two other times during the current bull market.

You can see the recent run in the chart below...

The Nasdaq moved higher every single trading day from July 7 to July 20. The current market uptrend is strong.

Of course, even during a strong bull market, stocks usually have plenty of down days. The recent run is a rare anomaly... and one we should pay attention to.

In short, stocks tend to keep going up after these rare strings of consecutive up days. The table below shows what similar extremes have meant for the Nasdaq since 1971. Take a look at the returns...

Again, this is a rare anomaly. It has happened less than 1% of the time since 1971. But it has also occurred before big gains in the Nasdaq.

Specifically, buying after the Nasdaq jumps 10 days in a row has led to a 2.3% gain in one month and a staggering 14.6% gain in three months.

A gain of 15% in three months seems like a crazy prediction... But the Melt Up is in full effect... And history points to big gains after this rare anomaly.

Now isn't the time to be timid and sit on the sidelines. It's time to be bold and buy.

Get out there and do it.

Good investing,

Steve Sjuggerud and Brett Eversole

Editor's note: How high will this bull market go? When will the bubble pop? Is it too late to get in? Steve Sjuggerud has the answers. He gathered everything you need to know in a brand-new, free report for Stansberry Research readers. Watch Steve's short presentation here.