It’s funny. During every bull market, I inevitably get labeled a “permabull,” usually by people who spend their time fighting trends instead of participating in them.
They want me to turn bearish while prices are going up, largely because they’ve already decided not to be involved. For some reason, that decision needs validation.
What makes it strange is that none of this is a mystery. We have decades of data. We know asset prices trend.
We know markets do not move in straight lines, but they do move in directions.
And we also know that humans behave irrationally, especially when money is involved and their stress levels are elevated.
Even with that understanding, I still question my own market thesis constantly.
That part never goes away. I think about it all the time because that’s the job.
But what I don’t do is change my mind because someone on Twitter is upset or loud or confident.
I need to see the evidence. The market has to prove it.
When Is It the End?
It’s important to remember that this is a market of stocks, not a single stock market. There are thousands of stocks of different sizes, across sectors, industries, and countries around the world.
That distinction matters.
When fewer stocks are participating to the upside, that’s an early warning sign that something may be changing.
When more stocks start moving lower, that warning becomes harder to ignore.
That combination has historically marked the transition from healthy bull markets to something very different. We are not seeing that today.
In fact, we are seeing the opposite. Participation has been expanding, not contracting.
Based on that evidence, we have continued to act accordingly and remain buyers of stocks.
That has nothing to do with being a permabull.
Historically, environments like this have rewarded staying invested and looking for opportunities, not stepping aside out of fear.
And, yes, I still think about the downside constantly. I always do.
How Others Are Thinking About the End
Yesterday morning, I was reading Ari Wald’s Saturday note. Ari is one of the best technicians in the business and currently serves as Head of Technical Analysis at Oppenheimer & Co.
Every year around this time, he publishes his “Big Numbers” report. I look forward to it because it consistently includes insights that are useful, practical, and grounded in history.
This year was no different.
Ari and I were trained in similar ways, read many of the same books, and came up through the market at roughly the same time. So it’s not surprising that we often frame things similarly.
He just has a knack for saying it more cleanly than I do. Here’s how he summarized his thinking on what typically marks the end of a market cycle:
Historically, while the specific cycle-ending catalyst usually changes, whether it is tighter monetary policy, economic recession, a bursting asset bubble, runaway inflation, or a global shock, the warnings have remained constant. Narrowing breadth, defensive leadership, and tightening credit. Absent these signals to start 2026, we are targeting S&P 7,700 in anticipation of an extension of the bull cycle.
He goes on to explain his targets and what would cause them to change, but that discussion is for him and his clients. I don’t want to step on that.
What matters here is the framework.
The Signals That Actually Matter
The same three conditions tend to show up near the end of cycles, regardless of the catalyst.
First is narrowing breadth. We do not have that. Breadth has been expanding.
Second is defensive leadership. We do not have that either. The S&P 500 High Beta Index just closed at all-time highs relative to Low Volatility.
At the same time, Consumer Staples just finished the quarter at their lowest relative levels on record.
Staples were the worst-performing sector in 2025 and remain the only sector not in an uptrend. That is not leadership. It’s the opposite.
Third is tightening credit. That’s also absent.
The Federal Reserve has already begun cutting rates, and fed funds futures are pricing in additional cuts this year. That is not tightening. It is easing.
Following the Evidence
The next cycle-ending catalyst could be a recession. It could be an asset bubble bursting. It could be something entirely new.
What matters is not guessing the catalyst. What matters is recognizing the conditions that consistently show up beforehand.
We are not seeing weakening breadth, defensive leadership, or tightening credit. We are seeing the opposite.
That doesn’t make me a permabull. It makes me a trend follower.
And when the next bear market eventually arrives, they will call me a permabear all the way down.
It happens every time.
Watch.
This Week in Everybody’s Wrong
On Monday, we prepared for the “Midterm Scaries.”
It’s Year 2 of the four-year Presidential Cycle, historically one of the most difficult stretches for the stock market.
We will, however, continue to let price and not the calendar tell us when the game has changed.
On Tuesday, we reviewed the benefits of watching the bond market.
It’s the biggest part of the global financial system, by far, and it matters.
And the bond market never stays boring forever.
On Wednesday, we counted the number of stocks and sectors that are currently in uptrends.
We’re watching closely for any signs of deterioration, something that would tell us the trends are starting to roll over.
It hasn’t happened, but when it does we’ll adjust accordingly.
On Thursday, we said “goodbye” to 2025 and “hello” to 2026.
Of course we know asset asset prices don’t reset just because the calendar does.
The forces driving asset prices during this broad-based bull market didn’t disappear overnight.
On Friday, with stocks around the world moving higher, we brought it back home for a sector-by-sector look at the U.S.
Everybody assumes that after three years of double-digit gains a major bear must be coming.
That’s just not how the stock market works.
On Saturday, Sam Gatlin shared a great story about how we met.
We value teaching, learning and mentorship highly around here.
And, as Sam writes, once you see everybody’s wrong, you can’t unsee it.
Have a great Sunday.
We’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs