Investors are terrified, and maybe they should be.
After all, the market’s just experienced its second huge fall in the span of only 5 months. As of last week, the market has dipped somewhere around 8% in 2016 alone, depending on which index you’re looking at!
And the negatives appear to be stacking up fast, with oil prices, China worries, and everything in between. So the big question is, has fear taken over?
Fear is something that can kill bulls. You see, the stock market can be a very sensitive and fickle thing sometimes. All it can take to stop a climbing market in its tracks is a few rumors and a bad break…
…Than the investors’ emotions take over.
But something easily forgotten in all this is the fact that we are “due” for a bear market.
The current market has been rising since March of 2009 – that’s nearly 7 years of ascending.
The tides look like they’re now turning. Here are just a few reasons why investors have little faith in the market right now…
- Worries over a vulnerable Chinese market and economy.
- Fear over a global recession, with Europe offering little stability whatsoever.
- Big-time trouble for oil.
Even the big banks are worried about oil right now, with loans they’ve given out in very real risk.
But in the midst of all this, including a market fall that’s brought Wall Street down to August levels, there’s one group of very savvy people who are getting extremely bullish…
The insiders.
A quick check of the insider transactions ration, which reads the amount of insider buys versus insider sales, shows a reading of 4 right now. For perspective, any reading over 20 is bearish and any reading below 12 is bullish…so we’re well into the bullish zone!
Yet this is NOT a long-term indicator. Instead, I think this simply warning us that the rubber band of the market is ready to snap back.
You see, the stock market is like a rubber band being stretched. It can’t ever drop or climb continuously without snapping back one way or the other. And with the current levels of the stock market being equal to the bottom of a short box from August and September, this is the perfect time for the rubber band to snap upward.
So here’s what I’m expecting going forward…
A short-term bounce upward that will allow the market to eventually continue its descent.
