How to Spot the Next Bull Market Before it Begins
If there is one question every trader and investor wants to know the answer to, is when the next bull market is happening. It is nearly impossible to identify the precise starting point of such an event, but recognizing the initial signs foretelling the beginning of the major upward momentum is entirely feasible. That is as long as you know what you are looking for – a blend of macroeconomic changes, monetary policy shifts and chart evidence. Being aware of these early signals empowers you with the knowledge to spot the trend at its onset before everybody catches wind of it and gives you the confidence to make educated decisions.
The financial landscape could be shifting at any point, and there could already be hints indicating the early stages of an upcoming bull market. To recognize them, you need to be monitoring a few key indicators.
Quantitative Easing (QE) Shift by the Fed
Quantitative easing, the monetary policy tool central banks use when they want to boost the economy, involves buying government bonds and other securities from banks to increase money supply. When the Fed pivots from quantitative tightening to increasing its balance sheet (QE), in combination with lowering interest rates, it could encourage spending and investment, and it could trigger the beginning of a strong bull market.
Broad Market Participation
A healthy bull market is often characterized by high market breadth, meaning a large number of stocks across multiple sectors and cap sizes participate in the move. When mid-cap and small-cap stocks start to achieve strong results and market participation widens, there is strong indication that optimism is extending to diverse industries and company sizes. Several technical analysis patterns like increasing advance-decline ratios, rising market breadth indicators, strong results across large-cap and small-cap indices and high trading volumes can help you identify high market breadth conditions.
High-Volume Reversal Bar
As a reversal shows the moment a price changes direction and heads the other way, a high-reversal volume bar on key indices like the S&P 500 could signal buying in large volumes from institutional investors. A turning point of this size can suggest a definitive bottom for declining prices and the beginning of a strong upward trend that could develop into a full-blown bull market.
Significant Drop in Consumer Debt-to-Income (DTI) Ratio
On a macroeconomic level, the Consumer Debt-to-Income (DTI) ratio reveals more than just its face value – how much of a person’s monthly income is needed to cover debt repayment. A sharp decrease in DTI ratio reveals that a lower percentage of earnings is put toward settling obligations, meaning more funds can be used for investing or spending, which in turn boosts the economy. Historically, these conditions have been a reliable precursor of a strong and prolonged bull run.
200-Day Moving Average
The 200-day simple moving average (SMA), the widely used and trusted technical indicator that averages an asset’s closing prices for the previous 200 days, highlights the direction of an asset’s movement by smoothing out short-term volatility and cutting through the market noise. When trying to track down the next bull market, look for persistent pricing above the 200 SMA, for major indices. This can be a strong indicator for a long-term shift towards a sustained bull trend.
The Case for a 2028 Bull Market
General projections suggest the Federal Reserve could follow a path toward monetary policy easing and rate cuts from late 2026 through to 2028. U.S. president, Donald Trump, is also directly and indirectly pushing for lower interest rates which could help reduce unemployment rates, power the development of AI data centers and provide a less costly solution to servicing the US multi-trillion debt. However, the world’s largest central bank will be weighing in the Iran-war inflation effects before making any decisions.
Which Assets will Go to the Moon?
In an upcoming bull market cycle, not all assets will perform the same. To make the most of the next big market shift, you need to focus on the assets that have the potential to outperform others. Discover the key players that could showcase explosive performance in the list below.
Technology & Energy Stocks
The smart technology and energy sectors are expected to lead the race in tandem. Mass adoption of AI could still be in its initial stages, but it is likely to record a rapid ascent off the back of its productivity earnings. The energy sector is also projected to rise, boosted by the increasing demand for electricity to power AI data centers, re-industrialization and the oil and gas price volatility emerging from geopolitical risks in the Middle East.
Small-Cap & Mid-Cap Stocks
Small and mid-cap (SMID) shares could be on track to outperform large-caps due to sharp increases in earnings, lower interest rates and historical discounts in relation to mega-caps. Coming off years of extreme underperformance, they are cheaper than large caps in a historically unusual way that suggests the valuation discount has the capacity for significant earnings. Also, as small and mid-cap stocks largely depend on external capital, easing conditions including lower interest rates, can create a favorable environment for their development.
Bitcoin Halving Cycle
For the next Bitcoin cycle, likely to start with the digital coin’s upcoming halving event in 2028, analysts forecast a subsequent price rise in Bitcoin, that can potentially spill across the broader crypto market. The upward price movement could culminate to a high around 12 to 18 months after the halving event. These predictions coincide with the projected stock bull market.
What you need to be watching
The fragile state the global economy is currently in could intervene with the Fed’s plans for a looser monetary policy. Despite Kevin Warsh’s initial dovish approach, if inflation caused by the US-Israeli war with Iran persists and job markets show significant weakness, the Fed committee could decide to leave rates unchanged or even raise them. Such an event could cause the goal post for the bull market to keep moving further.
Key takeaways
To catch the turning of momentum and the onset of the next bull market, you need to be looking at the broader economic picture where a number of factors – technical, macroeconomic and sentiment-based – come into play. Knowing what indicators to watch out for while remaining watchful of unforeseen turns, allows you to stay agile, act at the right time, maximize earning potential and minimize risk. To help you stay up to date with the latest market news and updates, Windsor Brokers offers you free access to premium tools. Check out our Economic Calendar to discover key global reports and announcements categorized by time, date and importance, visit our Market News blog for daily and exclusive financial articles prepared by our renowned research team and explore insightful tips on our social media accounts. Trade the new bull market at windsorbrokers.com
