Could the stock market be indicating bearish signals right now and are investors even going to know them when they see them? The stock market today has been on such a long bull run that any blip on the map for a real correction may not be something that most are even paying attention to right now. So let’s look at it from a bearish perspective and see it through the eyes of those looking for a correction.
Bears generally treat this near decade’s long bull run as if it’s just one very long uptrend that is now losing steam in its “old age.” Despite this assumption, many argue that it’s not. Also, bears will also offer negative reasons as to why the market should stall, but that will start with the view that the stock market is too high. Again, the argument is that it is not.
The Stock Market’s Run Isn’t One Long Bull Market
During its entirety so far, only 5 out of the nine years were bullish. The other four or so years were spent in a generally stalled state; one that built foundational levels for the resulting bull moves. Fundamentals have adjusted, investors refocused, and stocks rose to create some plateaus to rise again.
By observing some indicators like moving averages, trend lines, divergence/convergence lines, and some other technical indicators, investors should be able to see the ebb and flow of the market’s rise, stall, and rebirth over the course of the last nine years. It’s important to keep in mind that there are fundamental drivers that help create these bases of accumulation, which we’ve identified as short-term plateaus.
Where Is The Stock Market Now?
Most likely the market is once again coming out of a 1-year stall or foundational level. The market could once again dip back down or even reverse its course entirely, but it’s important to identify that it isn’t likely to drop just because the overall trend has been bullish. By looking back at historical comparisons, there are other factors to take into consideration. Since 1990’s financial recession, there have been 3 rising markets. The first two ended when market bubbles created unusually high valuations that couldn’t be supported. Right now, the stock market today doesn’t appear to have one of these bubbles.
Most bearish sentiment looks at optimism in the market, but that is not a real fundamental that can be leaned on for accurate analysis. This kind of rationale is used to sort of support the idea that the market is too high, but that’s just a case of cyclical reasoning. Fortunately or unfortunately, one cannot rely on historical market conditions alone to predict stock price movement. In this case, bearish sentiment will remain, but at this current point in time, the stock market doesn’t necessarily depict additionally contrived options that would suggest a bear move is coming in the short term.