Meet Kevin: Legendary Stock “Suit” Flips
Calling a market top or bottom remains a challenge. As the old saying goes, “They don’t ring a bell at the top.” However, investors can pick up on clues.
For instance, the stock market’s most recent peak occurred when the Fed came out and announced that they would soon raise interest rates. A bottom is more challenging. That’s because markets tend to bottom out while the news still looks dire.
And by the time people realize the market has already bottomed out, it’s likely already headed higher. That’s why it’s important to find clues, such as macro analysts who have been bearish flip to bullish.
That’s been the case recently as stocks have moved higher in the past few weeks.
In a world flooded with data, many points may not always fit an investor’s thesis. Knowing which data is important now, and how much it should be weighed, remains critical.
Much of the market’s recent behavior indicates a potential bottom. Investors now have a negative outlook overall. That’s usually a sign that the worst is over. Prior market bottoms have seen similar psychological behavior.
Not only that, but prior market bottoms have seen some sharp, initial reversals, much like July’s rally. That includes the market bottom of the Great Depression in 1933, among others.
Investors should take history with a grain of salt. But we may be in the early stages of a new bull market if prior macro data concerning market bottoms holds true.