Don’t let the title put you off, this bear market warning indicator is actually giving the all clear. This chart featured in the first exclusive Weekly S&P500 #ChartStorm on Twitter. It capped off a series of 10 charts which outlined the key macro and fundamental backdrop underpinning the stock market outlook.
Get The REITs eBook in PDF
Get our PDF study on REITs and our other investor studies! Save it to your desktop, read it on your tablet, or email to your colleagues.
The overall conclusion being that this is a "healthy correction" or in other words a reset of extreme bullish sentiment and rising leverage. Meanwhile, as this chart confirms, the macro backdrop is still solid. Until indicators like this start to turn the risk of a bear market remains low in the immediate term.
The key implication being that this is likely a buying opportunity, even if some more water still needs to go under the bridge. Nevertheless, it is a shot across the bows that we are entering into a new regime of higher volatility as the cycle matures and global central banks turn the corner.
Li Lu’s Four Basic Principles of Value Investing
Li Lu is undoubtedly one of the most under-appreciated investors. The founder and Chairman of Himalaya Capital Management established his firm in 1997 based on the principles laid out by Benjamin Graham. Lu is a close friend of Charlie Munger and was once thought to be in-line to succeed Warren Buffett as the chief investment Read More