Image source: Pixabay

What I am doing in the stock market at the moment is nothing. Two weeks ago, I did a lot of selling, including selling all of the stocks that I bought last year, to simply take some money off the table to use later when I think the opportunities are better. I just don’t see a great trade to make now in the markets, especially after the market rallied like it has since October.

Last year, in July, I stepped away from the markets while saying I was not planning to do any trades for awhile, and I didn’t do any buying until November. The problem now is that the internals of the market have been fading since New Years, and this typically signals that a big rally is on borrowed time. It means we are likely heading for a market correction, or even a new bear market.

Now, as I pointed out in my last video update, it takes months of internal deterioration to lead to a new bear market, and this has just been going on for a few weeks. Back in 2021, it really happened from March to the end of that year, and the market averages continued higher as that year went on, too. I pointed this out throughout 2021, saying it meant a new bear market was coming. And then it came in 2022.

Take a look at this chart of the percentage of stocks above their 200-day moving averages back then and now, and you can see what I mean, with how this indicator went down throughout 2021.

See how this indicator rolled over last year in July? The market corrected after it did. So, we could easily be heading for a correction soon, perhaps until it becomes clear when interest rates will be reduced by the Federal Reserve.

Though, if the internals act like this through the summer, it would be a sign that we actually are in a major market topping process. However, it will take time for a true bear market to happen, even if this is the start of the type of internal deterioration that began in the first quarter of 2021.

We’ll just have to see how things play out. Either way, I do think that the market will rally again after a correction or a pause period here, which is likely to last for months.

Interestingly, if you think back and remember 2021, the top in the internals that year coincided with the meme stock mania that hit all the news channels, as seen with the likes of AMC and GameStop.

Talking heads on TV were talking about how the little guy was beating hedge funds and could triumph over Wall Street just as the market internals peaked. Now, it is Nvidia that is the fascination of the moment.

But, it is more like the Cisco stock of 1999 or 2000 than AMC or GameStop. This is because it is is not just the small fries that are chasing it, but the hedge funds and money managers, too. In other words, everyone is chasing it.

Back in January 2023, I was saying that a new cyclical bull market was starting, and it would likely last for two years.

I actually bought NVDA around that time when it was under $200, because it was one of the big-cap stocks inside the Nasdaq that had been displaying strong, relative strength performance over the preceding few months, as that last bear market ended.

I thought it would be a new bull market leader. I then sold it in March. So, I’m not perfect. That’s why no one will tell you when they sell, and they seemingly always tell you to buy on TV or YouTube.

Well, I sold it. I didn’t care, because other things I bought went up anyway. Last year, I bought shipping stocks in the summer. I sold them all two weeks ago for huge gains. And now I’m not doing anything until I see something worth doing.

There are no fat pitches in the market that I can see right now. And, no, the stock market is not going to crash this week, either.

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