To be sure, the current stock market environment is challenging. Intraday volatility is quite high, the major indices are not marching to the beat of the same drum, and holding the wrong stock or sector ETF has proved to be a frightening affair in 2014.
In case you can’t relate to this sentiment, check out the charts of the ETFs in Biotech (NYSE: XBI), Internet (NYSE: FDN), and Social Media (NASDAQ: SOCL) or names like Netflix (NASDAQ: NFLX), Amazon.com (NASDAQ: AMZN), Linked-In (NASDAQ: LNKD), Pandora (NYSE: P), Yelp, and Twitter (NASDAQ: TWTR).
In short, the action has been more than a little scary at times. This is a market where it has been oh-so easy to lose money and with the exception of the strategy of being long only on Tuesday’s (according to Bespoke, being long on Tuesday’s would have produced a gain of 9 percent so far this year), making money has been downright difficult.
Time For The Bears To Return?
The action has left many analysts worried that the current bull market, which is clearly long in the tooth by just about any measure, could be slowly morphing into something far grizzlier in nature. As such, this might be a good time to review what might cause the bears to suddenly awaken from their hibernation and begin wreaking havoc on people’s investment portfolios again.
But before we get started on a review of potential bear market catalysts, let’s remember that, as the chart below of the S&P 500 plotted weekly clearly illustrates, this remains a bull market.
S&P 500 Weekly
However, if investors have learned anything over the last 15 years, it is that (a) all good things come to an end and (b) bear markets are no fun (and should be avoided if at all possible).
So, given that this bull has run a long way and as it can be argued, is looking a little tired, it is a good idea to be on the lookout for potential bear market catalysts.
We’ve come up with about a dozen. So, let’s review.
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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Positions in stocks mentioned: none
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.