The US stock market (excluding #BTC, as BTC also includes the US dollar index and recession factors, which should be viewed independently) has recently rebounded, and many people are asking me if this indicates a reversal. Personally, I don't think so. We also need to look at the high point of the S&P 500 on March 25 to see if it can break through, which is statistically quite difficult.
In fact, investing in stocks is generally simpler than investing in cryptocurrencies. The three main forces that influence the stock market (the three principles of order) are: the economic cycle, the annual capital cycle, and economic indicators. If two of these three indicators are trending upwards, it indicates a bull market; conversely, it indicates a bear market or a sideways market.
1️⃣ In terms of the economic cycle, we are currently in the transition period from the peak of the Kitchin cycle to the recession phase, which is a typical sideways market with wide fluctuations. However, we will soon face a downward cycle. From Q1 2023 to Q2 2025, we are in the expansion phase (which has been discussed in previous articles), indicating a bull market cycle.
2️⃣ Regarding the annual capital cycle, this can be checked through professional service software like Bloomberg or Wind, where you can see the movements of institutional funds. In February and March, they sold off a lot of assets in bulk. The capital cycle is starting to decline from its peak, and a turning point has appeared.
3️⃣ As for economic indicators, I often mention various economic indicators, including CPI, PMI, employment data, GDP forecasts, etc., which can mutually verify the overall macroeconomic situation. It is crucial to determine whether the economy is on an upward or downward trend, especially under the current tariff war, where rapid economic growth is hard to achieve.
If all three indicators show turning points and have a tendency to trend downward, then why take action now? Why not wait for the turning point from recession to expansion to invest, which may offer higher certainty and stronger safety. 🧐
👇 Below is the situation of the stock market in 2008. Rebounds are common, but the trend turning points still need to be viewed through the three principles of order:
- January 22, 2008 → February 1, 2008
- Increase: Approximately 6.5%
- Duration: 10 days
- March 10, 2008 → May 19, 2008
- Increase: Approximately 11.7%
- Duration: 70 days
- July 15, 2008 → August 11, 2008
- Increase: Approximately 9.4%
- Duration: 27 days
- October 10, 2008 → October 14, 2008
- Increase: Approximately 23.9%
- Duration: 4 days
- November 20, 2008 → January 6, 2009
- Increase: Approximately 24.3%
- Duration: 47 days
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