When will this bull run end? These stock-market sectors are telling us what we need to know.

A relative-strength analysis by Ned Davis Research indicates the current bull market is at least three months from its conclusion. This forecast is based on the historical performance of S&P 500 sectors in the final three months of past bull markets since 1970. Crucially, sectors that typically underperform just before market downturns—communication services, utilities, and energy—are currently ranked mid-pack (sixth out of ten), rather than at the bottom, suggesting continued market strength.

Analysis

A relative-strength analysis from Ned Davis Research suggests the current bull market is not yet at its peak, providing a tactical outlook of at least three more months of upward momentum. This conclusion is based on a historical model tracking S&P 500 sector performance during the final three months of all bull markets since 1970. The core evidence is that sectors which historically underperform significantly just before a market top—namely Communication Services, Utilities, and Energy—are currently not at the bottom of relative-strength rankings. Instead, these sectors collectively hold a mid-pack rank of sixth out of ten, a positioning inconsistent with the typical late-stage bull market behavior. This deviation from the historical pattern of late-cycle laggards indicates that the conditions typically preceding a downturn have not yet materialized.

Key Decisions for Investors

• Investors could consider maintaining a constructive to overweight exposure to equities, as this specific indicator suggests the bull market has at least another three months before reaching a potential top.
• Portfolio managers should closely monitor the relative performance of the Communication Services, Utilities, and Energy sectors, as a significant deterioration in their rankings could act as a key leading indicator for an impending market downturn.
• This technical signal should be used as a tactical input for near-term positioning rather than a long-term strategic signal, and it should be corroborated with other fundamental and macroeconomic data before making significant allocation changes.