"How much longer can this bull market actually last?" asks one market watcher. Mark Tepper, the CEO of Strategic Wealth Partners, spoke to CNBC's "Trading Nation" on Thursday, indicating that investors should continue to ride out the bull market until three indicators come into play. (See also: Intl. Stocks Will Outperform Domestic Market: JPM.)
As the market comes off another record week, many on the Street remain concerned over a handful of factors including inflated valuations, global trade wars and rising geopolitical tensions.
"This is now the longest bull market in history and at some point all good things have to come to an end," said Tepper. As a result, his firm has looked out for indicators signaling an overheated market and a forthcoming recession. He highlighted three indicators that together he says accurately predicted the last seven recessions since 1968, "with not a single false positive."
The Three Warnings Signs
The market watcher's first sign of a forthcoming dip in the market is an inverted yield curve. He indicated that that as a standalone signal it is typically premature and "flashes red" by inverting 12 months prior to the start of a market downturn. Currently, the yield curve has not inverted and remains "pretty flat."
Second, Strategic Wealth Partners pointed to the direction of the year-over-year (YOY) change in the Leading Economic Index, which predicts future global economic movements. A recession typically follows a contraction in the index, said Tepper, who stated that it is still growing at 5% YOY.
According to the market watcher's analysis, investors shouldn't be concerned about a recession for at least another 12 months. (See also: 7 Global Blue Chips for a World of Rising Turmoil.)