Charting stock market tops “unequivocally” around recessions, corporate profitability, asset multiples, debt seizures, yield curves, and unemployment rates—among other things…
As any of our clients and students have seen for the past few years, our Market Phase Cycle patterns have been describing a bull market scenario, one which is not near expiring any time soon. Over recent years, any dips in the stock market have been opportunities to buy in further. The leading, lagging, and coincident signals that have driven this conclusion unrelentingly continue now.
Pattern recognition in macroeconomic analysis is a funny thing. We look for patterns and rules for market tops and market bottoms, and we make our best understanding of when we see the key elements of a pattern recurring. However, for any single rule we build, we can always find an exception. So, it’s a tall order to use words and phrases like, “unequivocally” and “without ambiguity” when talking about the current bull market pattern.
What discipline must we apply in order to gain confidence in our Market Phase Cycle patterns?