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The good news and bad news - Part I. The good news

Jay Kaeppel
2026-06-15
Part I of this two-part series details a variety of typically reliable indicator signals that portend good things for the stock market in the year ahead. Part II will highlight a variety of other indicators signaling caution and the potential for below-average market performance in the near-term. Readers can then weigh the evidence and draw their own conclusions.

Key points:

  • This is Part I of a two-part series. This note is the "Good News" regarding recent indicator developments
  • While many argue that the stock market is overextended and that valuation levels are too high, a wide array of indicators is nevertheless flashing favorable signals, and they are detailed below
  • Before getting too bullish based on the information below, however, you might wait for Part II, so you can compare and contrast, and weigh the latest additions to the bullish case against the latest additions to the bearish case

Favorable signal #1: Industry % Indexes in Bear Market

This indicator shows the percentage of 23 industry groups trading more than 20% below their 52-week highs. The chart below shows all dates on which this figure fell below 10%. Obviously, to drop below 10%, it must first rise above that level. An increase above 10% typically signals a market correction. The hope is that a drop back below 10% signals a positive reversal. Recent signals have occurred in April and May, and most recen

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