I’ve been bullish for obvious reasons since Trump won the election.

There’s no way to fight big tax cuts for companies.

It’s welfare for businesses.

And it’s the top 1% or so who mostly own them, whether it be directly or through stocks.

That impacts earnings and cash flow, which, in turn, drives the stock market.

Classic indicators – like the advance-decline line – look for a narrowing of stock buying into a top with smaller, everyday companies that aren’t participating. This one is not signaling a top yet.

Although, the extreme dominance of the FAANG stocks suggest otherwise…

As does the clear underperformance of the broader NYSE index.

The yield curve is approaching an inversion (short-term rates higher than long term), but hasn’t yet. That normally happens as much as a year ahead of a major top, so no sign yet either.

What bothers me most about the top back in January 26 is that we didn’t get a typical 40% crash within two to three months – which has occurred after every major stock bubble peak in the last 100 years…

Hence, this long sideways trading range suggests another rally is still ahead before a major top.

The Nasdaq and small-cap Russell 2000 have hit new highs since January 26. The S&P 500 is close, and even the lagging Dow isn’t that far away.

Such new highs may just be it!

On the other hand…

That steep rise into January 26, 2018 still looked like a classic blow-off top…

It came close to very strong long-term cycles hitting in late 2017.

And it’s also hard to trust any of the classic indicators since early 2009, when central banks took over the markets with massive QE and manipulation.

QE has temporarily broken almost every natural cycle we’ve uncovered over the decades. Why not technical indicators as well…

However, there is one good – albeit less-classic – indicator that is suggesting a steeper crash could be just ahead.

The Bloomberg Smart Money Flow Index.

The assumption is that the dumb money trades and covers its stops in the first 30 minutes of trading, depending on the market’s opening and the daily news.

Smart money is more calculating. It bets more on the close after observing and testing the market during the day.

What I like about this index is that it’s not as closely followed as other classic indicators, but it still has a darn good track record.

The track record of this indicator has been best since 1987, when monetary policy first came to the forefront of Fed policy with Greenspan. Hence, it may be a bit central bank-proof.

Since late 2008, such policies have become absolutely dominant and extreme, taking over the free market like no other time in history.

Smart money was completely with the tech bubble, but the index peaked on August 25 1999, just six-and-a-half months ahead of the actual peak on March 10 for the Nasdaq and S&P 500.

That was a great warning signal for the top of the most extreme market run until this one from 2009-2018.

This index also didn’t rally for the first years of the late 2002 to the late 2007 rally, although it still peaked near the top in late 2007. Hence, it was skeptical of that rally.

More importantly, it bottomed just after the first dramatic crash into early November 2008, and not with the final low in early March 2009.

That divergence would have given a clear buy signal in early 2009.

And there was a similar divergence into the October 2002 bottom that would have given a buy signal early on.

This indicator was full-on for the early 2009 to early 2018 bubble, all the way to the top on January 26. That top was not questioned by this indicator.

The problem is that it has been straight down ever since.

It’s the rally since April – to new highs in many indices – that smart money is not buying into, and is in question, big time.

This is the steepest drop in this indicator ever…

More than August 1999 to July 2002…

More than October 2007 to November 2008…

I’ve said for years that the next crash would be both the greatest and the final bubble burst.

Could we get a rarer and stealthy top like gold back in September 2011 when the market topped, but then traded sideways for a year before collapsing? Could the next collapse be just ahead on a similar 6.5-month lag from the peak on January 26 – like by mid-August or so?

It’s still hard to say with the classic indicators suggesting that this late-stage bull market still has some room to run…

But all such indicators are suspect in the first totally artificial bubble since the South Seas and Mississippi Bubbles of 1720 – and that was the greatest stock burst in history.

There are only two credible scenarios in this late-stage bubble: a peak just ahead in late 2018, or well into 2019. I see a very low chance of this bubble making it into 2020.

And you can imagine what that means for the 2020 elections.

I’ve been leaning towards the continued rally scenario in recent months, into our second set of strong long-term cycles that hits in late 2019.

But I’m going to be watching closely with more skepticism over the next few months given this warning.

Harry S. Dent, Jr. received his MBA from Harvard Business School, where he was a Baker Scholar and was elected to the Century Club for leadership excellence. His newest book, ZERO HOUR, Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage released mid-November 2017. Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research. Harry has written numerous books over the years. In his book The Great Boom Ahead, published in 1992, he stood virtually alone in accurately forecasting the unanticipated boom of the 1990s. That same year he authored two consecutive best sellers: The Roaring 2000s and The Roaring 2000s Investor (Simon and Schuster).