Various leading economic indicators confirm the stock market top is in and selling the rallies will be most profitable

by Bob Bronson, Bronson Capital Markets Research. February 22, 2005

As our two articles early last week forewarned: Major Stock Market Top Further Confirmed by Latest NAHB Housing Market Index Data and Predictable Peaks in Retail Sales Confirmed, the test of the stock market's yearend high is now likely complete, finishing what we believe was a classic post-election rally bull trap.

As we've pointed out before, this is similar to the 1968 and 1972 Presidential-election yearend rallies, which were then even more technically compelling as they went to more significant all-time new highs during that Supercycle Bear Market Period.

Note also that six of the last ten Presidents who served more than one term since 1865 (Nixon, Eisenhower, Roosevelt, Truman, Grant and Lincoln) "experienced" recessions in their fifth, or post-election, during which -- on average -- the stock market declined ~ 13%.

The chart below of recently-revised economic indicator data from the Conference Board still confirms there was very little economic substance to the latest post-election rally, so the Supercycle Bear Market will most likely now resume in earnest during the immediate months and quarters ahead.

Since the stock market top is now complete, our forecasting model, which includes four-paired factor groups, each with dozens of timing indicators: monetary-economic, socio-political, valuation-sentiment, and inter- and intra-market technical, also strongly suggests that selling equities, and selling them short, during inevitable doubting-Thomas rallies will be the most profitable course of action.

© 2005 Bob Bronson
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