Every Pullback/Bear Market Starts the Same Way

There’s been an obvious change in the market’s behavior over the past week with volatility finally showing some life. Here’s the reality; every pullback/bear market starts the same way; it starts with volatility rising. But not every rise in volatility leads to a pullback/bear market. From a historical VIX level, volatility is still extremely low. From a 2014 perspective though you can see the change rising combined with the fact that bullish sentiment is very high (everyone believes prices are going higher). On a day to day basis, the more the market has 1% or more swings in place, the closer it comes to transitioning into a bear market. Right now that’s still far away and until proven otherwise, the longer term trend remains higher.

Today the market is neutral. Another day’s pullback will offer some buying opportunities in the major indexes.

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