I'm Bearish – Here's Why:
Investors,
Markets (and life) move incrementally.
Before we can walk, we must learn how to crawl.
Before we can solve calculus, we must understand arithmetic.
Before mortgage rates can fall below 4%, they must fall below 5%.
Before stocks can make new lows, they must stop making new highs.
Before bear markets can begin, bull markets must weaken.
One step at a time.
This is what makes the market so challenging as an investor, and specifically as someone who tries to time the market — it’s rare when a sole datapoint, event, or catalyst immediately switches the market from bullish to bearish.
The market is hardly, if ever, binary as bullish or bearish.
On the contrary, the market is both bullish and bearish — in a constant tug of war between competing perspectives, opinions, concerns, risks, and unknowns.
Five weeks ago, I shared “The Charts That Scare Me”.
I used the following intermarket relationships to identify bearish divergences:
Credit spreads
S&P 500 vs. U.S. Treasuries (SPY/TLT)
Equal-weight discretionary stocks vs. consumer staples (RSPD/RSPS)
Since then, we’ve seen a material deterioration in market conditions.
At the time, I noted that equities (and Bitcoin) were still in firm uptrends, but that a further deterioration in the market internals could produce an outright shift in market structure, shifting away from a bullish environment to a defensive environment, to an outright bearish environment.
Notice the incremental change?
From bullish to defensive to bearish.
Today, based on a signal that just triggered, I have reason to believe that we’ve officially shifted into an outright bearish regime.
The goal of today’s newsletter is three fold:
Share the exclusive charts & bearish data
Explain how these developments could be invalidated
Provide solutions for how to implement this analysis into portfolios
This is objective, data-based research with the intent of being tactical & calculated.
I’m not here to make emotional or rash decisions, or to put fear in your mind.
I’m here to make (and keep) money as an investor, sharing my process with you.
If you want to know the exact information that I’m using to make decisions, these exclusive reports for premium members are the only place to get my most important insights, key takeaways, and portfolio strategy.