It is said that the market climbs a wall of worry. That is certainly so in the first leg up. Just when it seems the problems of the recent depression are being dealt with, a break in the action pulls the market down to reassert pessimism.
The second leg features more widespread improvement. Good mood seeps in and crests at the second peak. This happened in 2000.
Underlying weaknesses in the economy and the financial system become apparent during the third and final leg of a great bull market. In spite of this, stocks keep going up. Inertia keeps the trend alive, despite a steady decline in social mood. You may recognize this as what we have now.
Perversely, there ought to be some good news to accompany the absolute top. Some political, economic or financial occurrence that makes you feel like things aren’t as bad as you thought. You’ll breathe a sigh of relief.
That’ll be your personal signal that the bull market is over.