There's a big debate going on right now in the financial markets. Was January 2018 the top of this bull market? I don't think so. Several signs and indicators suggest that the S&P 500 will at least make a higher high vs its January 2018 high before this bull market can end.

Breadth did not make a bearish divergence leading up to the January 2018 high

Bull market tops are marked by long periods of bearish breadth divergences. In other words, breadth needs to be consistently deteriorating before the last rally of a bull market ends.

This was not the case from 2017 to January 2018. Breadth continued to move higher with the S&P 500, which means that there was no bearish breadth divergence.

Here's the NYAD Cumulative Line, which adds the number of stocks that went up and subtracts the number of stocks that went down. As you can see, the NYAD Cumulative Line made new highs along with the S&P 500 in January 2018.

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You can see that breadth always made a big bearish divergence before the 2007, 2000, 1973, and 1968 bear markets began.

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This implies that the bull market is not over. The S&P will make another new high, but breadth should not make new highs (there must be a bearish divergence). When we see a bearish divergence, we can start to see the formings of a new bear market.

The economy continues to improve

"The stock market is not the economy" is true on a day to day basis but not on a long-term basis. The stock market and the economy move in the same direction over the long run.

The economy continues to improve today, showing no signs of slowing down.

You can see the unemployment rate is clearly trending lower.

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Manufacturing PMI is improving and trending higher.

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Industrial Production growth continues to pick up.

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And New Home Sales growth continues to trend higher.

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Financial conditions have only recently started to deteriorate

Financial conditions were extremely easy as of January 2018 (before the stock market made a correction).

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But here's the thing: Financial Conditions cannot be used to time the bull market's top. It only tells you that the bull market has up to 1-2 years left. As you can see, Financial Conditions bottomed in January 1999, more than a year before the S&P 500 topped in March 2000. Likewise, Financial Conditions bottomed in January 2018.

Bull market tops are flat and highly volatile

The S&P 500's runup to January 2018 was anything but volatile. The S&P 500 went up in a nonstop straight line.

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This is not characteristic of bull market tops. The last rally before a bull market ends is not parabolic. The S&P always "rolls over" with high volatility. Bull market tops tend to be flat.

Here's the S&P 500 in 2007. Notice how the stock market was very volatile before it peaked.

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Here's the S&P 500 in 2000. Notice how the stock market was very volatile before it peaked.

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Here's the S&P 500 in 1973. Notice how the stock market was very volatile before it peaked.

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Here's the S&P 500 in 1968. Notice how the stock market was very volatile before it peaked.

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VIX also made an all-time low in January 2018. In contrast, VIX went higher before the stock market topped in 2000 and 2007. This also suggests the January 2018 top wasn't the bull market's top.

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I expect VIX to trend higher while the S&P 500 trends higher in the last leg of this bull market. (VIX and the S&P usually move in opposite directions). This bull market isn't over yet, but it only has 1 leg left.