In this report, we will outline how to recognize market tops when they occur. 

Every market top is slightly different, but they always have many things in common. There are always tell-tale signs in economic data, market sentiment, capital markets activity, corporate actions, etc. We will look at historical market tops: 2007, 2000, 1990, 1980, 1976, and 1972. We will then look at the current market and see how today compares and what we can learn from that. We hope this research report will be a blueprint and a useful tool for investors for years to come. 

Today the market shows many of the elements that are present near market tops. In particular, sentiment is extremely bullish, investors are very long and leveraged, and valuations are extended on a wide variety of measures. However, leading economic indicators are still not negative, and so far breadth and technicals have not deteriorated. Medium term stock market returns are likely to be negative due to excessive valuation, but there is no imminent sign of a market top. We would need to see a deterioration of our leading indicators before calling a market top. 

In the following table, we summarize the characteristics of market bottoms and tops. The table is a very useful checklist that investors can print and consult as events unfold in markets around the world. Clearly, many signs of a top are in place, but there are many characteristics that are currently missing. This report looks in detail at each of the signs: corporate, valuation, economic, market and sentiment.

 For a larger view of the table below go HERE 

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