A stock-market bear signal is at a more-than-4-decade high, says Goldman

A gauge of bullish and bearish momentum in the U.S. stock market is ringing alarms for strategists at Goldman Sachs. The investment bank’s so-called bull-bear indicator, which examines five market factors, indicates that the likelihood of a bear market occurring is at its highest point since around the mid-1970s.

Goldman analysts led by Peter Oppenheimer, chief global equities strategist, said an unusual period for Wall Street, characterized by loose monetary policy and a recent spate of fiscal stimulus has resulted in an uncannily bullish cycle for markets that is likely to come to a screeching halt. However, the upshot of the 54-page Goldman report dated Sept. 4 isn’t that investors should panic and head for the hills, but rather that a period of lower returns should be anticipated (see chat below).

The report comes as U.S. stocks have registered a decadelong, bull rally, making it the lengthiest period of equity-market prosperity, by certain measures, with the S&P 500 index SPX, -0.37% advancing more than 320% since the depths of the financial crisis in 2009. The Dow Jones Industrial Average DJIA, +0.08% during that period, has climbed nearly 300%, while the Nasdaq Composite Index COMP, -0.91% has rallied by more than 520%, underscoring the outsize returns in the technology-and-internet related sector that has helped to buttress the broader stock market then and now.

Thus far in 2018, the S&P 500 has gained 7.6%, the Dow has climbed about 5%, while the tech-centric Nasdaq has soared by nearly 15% in the first nine months of the year. (However, the tech sector has come under severe pressure in the past week).