December 9, 2021, 12:08 pm EST
Bullish Market, Bearish Mindset
While all major indexes are near the all-time record high area with Apple (AAPL) strong performance, we need to have a bearish mindset toward these bullish markets. We already pointed out our reasonings in our articles. But, we would like to highlight and summarize here to illustrate our mindset so that when more signs appear, we would be able to make a switch from bulls to bears quickly.
- Degraded Breadth Readings: We published several articles to point out the peak of the market breadth on February 9, 2021, and it was all the downhills since 09/11, 11/24, 12/01
- China’s Big Trouble: We believe that the bankruptcy of China Evergrande Group is the beginning of much bigger financial problems from China to the rest of the world: 09/14
- Inflation Threat: Out-of-inflation is coming as CPI reached 6.2% level: 11/12. This is the direct outcome of money easy policy worldwide. US Fed may begin to tighten up next year. So, this process of raising rates to fight inflation would be both painful and risky.
- COVID-19 Uncertainty: It is hard to know what really happened about COVID-19 due to a lack of knowledge and information about this deadly disease and scientific malfunctions. This is one of the major driving forces for the stock markets. Although it has been helpful for certain sectors or stocks, its magic bullish power has been diminishing: 12/03
There is other evidence like the shrinking volume on up days or lack of leadership to remind us for bearish direction. We would like to point out that the stock markets could quickly switch from bulls to bears with certain triggering events. We would begin to show some strategies toward this transition.