Everywhere I look, I see investors proclaiming that “THE” top is in and a bear market is about to unfold.First and foremost, there is NO reason to ever try to call a top.Why?Because doing so doesn’t make you any money. In fact, top callers usually miss out on major market gains by selling way too early.Consider what happened during the last market correction in April 2024. Then, just as now, the top callers came out of the woodwork. The market corrected for two weeks before rallying another 15%. Anyone who sold missed out on these gains.
Moreover, there are nearly ZERO signs from real market indicators that THE top is in right now.Consider the last major bear market that unfolded from early 2022 until October 2023. At that time, high-yield credit broke down along with stocks, signaling that a major shift had taken place in the financial system.
Today, high-yield credit is near all-time highs. If anything, it is signaling that stocks have sold off TOO MUCH!
The same is true for market breadth. Going into the bear market of 2022, breadth peaked before stocks.
Today, breadth is near all-time highs. It too is signaling that the selling is overdone for stocks.
