Investor speculation is reaching manic proportions. The seductive lure of extraordinary gains, receiving full coverage in the main-stream media, emboldens investors to engage in dangerous practices.
Unfortunately, this phenomenon usually ends in a reaping, where many investors take enormous losses.
For us, this situation prepares us for what may happen in the coming months, as the stock market continues to build up into a state of increased fragility. More violent corrections and rallies, than the relative calm we have become used to over prior months, may very well play out.
Such an increase in volatility shouldn’t cause us sleepless nights, as the underlying market environment is healthy and sound. All of our strategy’s fundamental leading indicators have returned to signal a green light, which will likely revert to warn of danger well before we see the arrival of a new bear market.