A sign of a potential end to the 12+ year bull market

Financial history demonstrates that foreign investors typically increase their purchases of US stocks at the most inopportune time.

For decades, significant foreign buying in the US stock market has been a reliable indicator of major tops.

This also holds true for stock markets in other countries.

For example, in the late 1980s, after years of largely avoiding Japanese stocks, foreign investors became net buyers.

Soon afterwards, one of the greatest bull markets in history came to an end.

In May 2007, foreigners entered the US market in unprecedented numbers.

The new record was a full third higher than the previous one, which was set in February 2000, one month after the Dow Industrials reached its all-time high and one month before the NASDAQ reached its all-time high.

The first five months of 2007 saw the largest burst of net foreign purchasing in history.

In October 2007, the Dow reached a new high and entered a bear market that lasted until March 2009.

This chart demonstrates why the topic of foreign stock purchases is timely.

Foreigners have just set a new all-time high in terms of stock purchases in the United States.