• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock We’re Topping With BEARISH Action Ahead!
Stock

We’re Topping With BEARISH Action Ahead!

by February 1, 2025
by February 1, 2025 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Listen, I’m generally a fairly optimistic guy. I tend to see the good in the stock market, while many others continuously focus on potential selloffs ahead. I remain mostly bullish for good reason as the S&P 500 has risen 75% of all years since 1950. It just doesn’t make sense to keep trying to bet against the stock market, especially when you consider the long-term 100-year monthly chart of the S&P 500:

It’s really hard to argue with this chart. Remaining long is nearly always the best answer. However, there are occasions when bearish signals begin to line up and it’s at those times that we need to take notice. The best recent example was as we headed into 2022. Currently, I’m not seeing as many bearish signs as I saw then, but I am absolutely watching the bearish signs develop. The analogy that I would use is that MAJOR storm clouds are brewing on the horizon. Will we be able to skirt the storm, or are we about to get a direct hit?

I’m beginning to think DIRECT HIT.

Let me just talk about sentiment for a moment. One key takeaway is that it’s a contrarian indicator. When others are bullish, we should turn bearish. When others are bearish, we should turn bullish. We can reach points of excessive bullishness and we might be getting there now in the options world. Simply put, the number of equity calls traded are swamping the number of equity puts. We haven’t reached the absolutely CRAZY period of extreme equity-only put-call readings ($CPCE) that we saw in the latter part of 2021, just before the 2022 cyclical bear market drop of 28% (on the S&P 500). However, those readings were insane and likely a once-in-a-lifetime, or at least a generation, bullish period. Current readings should not be ignored as history tells us that current levels of market optimism have foreshadowed selloffs in the past.

I generally focus on the 5-day SMA (short-term direction) and the 253-day SMA (long-term direction) of the $CPCE and routinely communicate both to our EarningsBeats.com members via our Weekly Market Report. For purposes of this article, however, let’s look at a 22-day SMA of the $CPCE:

I chose 22 days in this calculation as 22 trading days represents roughly one month. The 22-day SMA signal provided above has been rock solid too, which doesn’t hurt. Sentiment really does provide us clues about market direction and we’re at a level on this 22-day SMA that’s at least worth considering.

This is the tip of the iceberg in terms of bearish signals.

Bracing For A Drop

One of our favored features of our service is our Portfolios. Our flagship Model Portfolio is very aggressive and has outperformed the benchmark S&P 500 by a mile since its inception on November 19, 2018. Here are our Model Portfolio returns, by calendar year, since inception (S&P 500 return in parenthesis):

2018 (Nov 19-Dec 31): -1.32% (-6.83%)2019: +51.92% (+28.88%)2020: +100.96% (+16.26%)2021: +2.06% (+26.89%)2022: -32.72% (-19.44%)2023: +20.36% (+24.23%)2024: +48.30% (+23.31%)2025 (through Jan 31): +10.32% (+2.70%)

To give you some idea of how bearish I’m growing, I wrote to our members on Friday afternoon to let them know we were exiting all stock positions in our portfolios, a full 3 weeks ahead of schedule. Since we began the portfolios in 2018, we’ve never exited 3 weeks prior to the end of our portfolio quarter. The risk of holding is growing very rapidly and, quite honestly, why take a chance right now when we already are beating the S&P 500 by nearly 8 percentage points in just the first month of the year?

Calling a market top or bottom is never a guarantee, so we don’t look at it like that. Instead, we do our best to manage risk and the risk of a drop outweighs the potential benefit of remaining long at this time, in our opinion.

FREE Event on Monday

I like to consider everyone who follows me here at StockCharts and on YouTube as part of our EarningsBeats.com community – a community that we’ve been serving for over 20 years now. We have a history of making very bold and very accurate stock market predictions as part of our platform, where we provide market education, market guidance, and market research. Given the current market environment, historical patterns, and the evolving technical and sentiment issues, now is one of those times to make another very bold call.

Please mark your calendar and plan to join me on Monday, February 3rd, at 5:30pm ET for a very timely event, “Bearish Signals Abound: How to Navigate the Uncertainty”. The information that I will share may end up saving you a fortune. To register for this event with your name and email address, and to save your seat, CLICK HERE.

We’ll send you room instructions on Monday!

Happy trading!

Tom

You Might Also Like
  • Economic Modern Family’s Engine Idles While Growth Goes Fast and Furious
  • Decoding 10-Year Treasury Yields: A Monthly/Secular Perspective Overview
  • Gold Buyers Should Remember FDR
  • Is There “Blood in the Streets” for August 2023?
Share
0
FacebookTwitterPinterestWhatsapp

previous post
DeepSeek Rattles AI Stocks – Should You Buy The Dip?
next post
WNBA files trademark application to bring back ‘Detroit Shock’ as city submits expansion bid

You may also like

Rules-Based Money Management – Part 7: The “Dancing with the...

May 30, 2024

Indexes Masked by Mega Tech

May 13, 2023

EQUITIES CLIMB OFF LOWS WITH A PUSH FROM AEROSPACE AS...

April 29, 2024

Watch the Unemployment Rate – It Could Change Everything!

October 27, 2023

California is Going to Drop a Liquidity Bomb on The...

July 21, 2023

Discretionary vs Discretionary, a Fierce Battle Under the Hood

February 2, 2024

GNG TV: Stocks Take a Break for That 7th Inning...

August 10, 2023

Here’s Why You Should Be Buying Software NOW

June 30, 2024

S&P 500 Head and Shoulders Top Confirmed

September 23, 2023

What are the Equity Market’s Warning Signs?

January 31, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025
    • NBA star Russell Westbrook launches AI-enabled funeral planning startup

      May 7, 2025
    • Use This Multi-Timeframe MACD Signal for Precision Trades

      May 7, 2025
    • Judge allows lawsuit over Burger King’s Whopper ads to move forward

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,185 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,064)
    • Investing (538)
    • Stock (2,529)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against...

      May 7, 2025
    • NBA star Russell Westbrook launches AI-enabled funeral planning startup

      May 7, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,064)
    • Investing (538)
    • Stock (2,529)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Soybeans Could be the Next Parabolic...

    November 16, 2023

    The Halftime Show: Sharing “Secret” Chaikin...

    January 30, 2023

    We Called the Pullback

    April 21, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here