We saw a stock market at crossroads last week, as many indications began to point to increased risks and fragility. We had reached a point in a quick, volatile pullback where equities either tended to bottom out, or devolve into a downward spiral.

So far, with typical 2021 aplomb, the S&P 500 rebounded swiftly to near its all-time high. Underneath the surface, however, more and more cracks are starting to appear. Despite the new danger of an economic slowdown triggered by a new Coronavirus variant, Central Banks are increasingly forced by rising inflation to start closing their wide-open liquidity spigots. If this morphs into a double whammy for equities, it may cause the market regime to change over the coming months.

Strong year-end dynamics have a good chance to keep markets levitating for another couple of weeks, before we transition away from the unrelentingly strong rally since the March 2020 low — I am prepared for more volatility and deeper corrections in the beginning of next year.