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I got this article from net. a quick read ...
How will the bull market in stocks end?
One scenario is an escalation in long-term interest rates relative to the market earnings yield (inverse of price-earning ratio) to a point where the incentive for takeovers and buybacks is eliminated. One way that could happen is through overheating in the world economy. U.S. trading partners will have less need to suppress their currencies by printing domestic currency to mop up U.S. dollars, which in turn will curtail growth in U.S. dollar reserves and the recycling of those reserves into U.S. bonds. The end result: as foreign demand for U.S. bonds trails off, their yields (long-term interest rates) will climb.
Another way in which the bull market can end is through a decline in the market's earnings yield. This can come about from an appreciation in stock prices at a faster rpace than growth in earnings per share, as is happening now thanks to the merger and acquisitions boom and slowdown in the economy.
In short, keep an eye on China's so far unsuccessful attempt to cool its runaway economy. And keep another eye on the i) re-rating of stocks driven by the arbitraging of interest rates and the earnings yield and ii) slowing in earnings growth underway as the U.S. economy cools off. At some point, these trends are capable of snuffing out the bull market.
Maybe the end will come as soon as the second half of this year, as veteran technical analyst Ron Meisels suggests in his latest Phases and Cycles newsletter. His bullish market calls have been on the mark throughout this extended phase, but now he is saying: "...by the end of the second quarter the bull's fuel tanks will likely run close to empty. Therefore, the second half of the year may ... bring an end to the 2002-07 bull/bear cycle."
How will the bull market in stocks end?
One scenario is an escalation in long-term interest rates relative to the market earnings yield (inverse of price-earning ratio) to a point where the incentive for takeovers and buybacks is eliminated. One way that could happen is through overheating in the world economy. U.S. trading partners will have less need to suppress their currencies by printing domestic currency to mop up U.S. dollars, which in turn will curtail growth in U.S. dollar reserves and the recycling of those reserves into U.S. bonds. The end result: as foreign demand for U.S. bonds trails off, their yields (long-term interest rates) will climb.
Another way in which the bull market can end is through a decline in the market's earnings yield. This can come about from an appreciation in stock prices at a faster rpace than growth in earnings per share, as is happening now thanks to the merger and acquisitions boom and slowdown in the economy.
In short, keep an eye on China's so far unsuccessful attempt to cool its runaway economy. And keep another eye on the i) re-rating of stocks driven by the arbitraging of interest rates and the earnings yield and ii) slowing in earnings growth underway as the U.S. economy cools off. At some point, these trends are capable of snuffing out the bull market.
Maybe the end will come as soon as the second half of this year, as veteran technical analyst Ron Meisels suggests in his latest Phases and Cycles newsletter. His bullish market calls have been on the mark throughout this extended phase, but now he is saying: "...by the end of the second quarter the bull's fuel tanks will likely run close to empty. Therefore, the second half of the year may ... bring an end to the 2002-07 bull/bear cycle."