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Friday, January 7, 2022

Is the decade long bull market coming to its end?

As I told my chat group last weekend, we should expect some volatility and a weakening market in the first week of the new year. Well, we got the taste of that. After I took the profit from the long positions on Monday, I placed a few bets on the short side as well as an increasing VXX. Wed's hard selloff paid off well to me and I took another set of gains. Now with the sufficient pessimism seen especially for the tech stocks, I'm betting on a quick rebound next week. Today's harsh selloff has offered a great buying opportunity I think. That's how I advised my chat groups last night.  

This is a decade long bull market. Is the volatility we are seeing right now indicative of the end of this long bull market? Per a cycle analysis in comparison with what happened during the dot.com era, we are very close to the ultimate top of this gigantic bull run. However, we are not there yet. We may still have a couple of months to go and we may still see a few new highs along with it. But March could be a critical timing point where we may see an explosive topping formation, followed by the start of a bear market that may last for months, if not years. 

Of course, so far this is just what this analysis is suggesting, which may or may not turn out to be correct. The Market God has its own mind and it has its final say what he is going to do. Sentiment-wise, it seems we are not euphoric enough often seen at the real top of the market as there is a great deal of worry everywhere. We are also far away from seeing an inverse yield curve, which had always been a precursor in the last 5-6 recessions. In other words, there are conflicting indicators, which do not allow for a confident prediction when the end of the bull market will be. But be prepared for the worst while hoping for the best! 

I will continue to play the short-term bets based on extreme conditions while waiting for more convincing evidence to show up when the ultimate top is formed. Accumulating a lot of cash is definitely a great idea during this very uncertain time period!😜😇


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