With most of the major stock indices making new highs, it’s tough to argue against the bullish case for equities, particularly if you’re a long-term investor, and I’m not going to do that here,well maybe a little. For the short- term income trader (those that trade for money they can spend today) the stock index futures market provides ample opportunities both on the long and short side as the market never goes up in a linear fashion. Most of what this article has to do with is longer term time frames.

In the many years I’ve being involved in market speculation, one theme that always seems to surface when the markets experience a protracted bull run —as has been the case for the equities market over the last 5 years— is the notion that this particular bull market is somehow different than all the others. The inference being that this particular bull market can keep going longer than all the previous ones. In other words “this time it’s different” so there’s nothing to be worried about. I remember hearing these words in late 1999 in the midst one of the biggest stock market bubbles in history, and we all know how that movie ended. Now, I’m not suggesting the we’re in a bubble today, however if you have been paying attention lately, many of the recent companies that have been issuing stock to the public (IPO’s) have been lacking in profitability which is a hallmark of excessive speculative fervor. In addition, margin debt (money borrowed to purchase stock) according to the New York Stock Exchange is at record level. These are just a few pieces of data that might be early indicators of trouble, just food for thought.

In 2007, at the height of the real Estate bubble, I remember having a conversation with a friend of mine that just happened to be a Real Estate Broker and him telling me that the Real Estate market in California could never go down. He then proceeded to list all the reasons why his thesis was foolproof, and of course, we know how that turned out.

My point is that this type of thinking can be dangerous as it blinds us from the objectivity that we must always maintain in order to anticipate the turning points in the market. The reality is that the markets throw off plenty of warning signs before they start falling in earnest. The problem is that most investors, either ignore or dismiss these warning signs altogether. Only after it’s too late will they tend to take action,that’s just human psychology at work. We must remember that our natural human tendencies always get us in trouble when it comes to trading. What this tells us is that we need to change the way we think in order to change our results, and part of that change in mindset is to be proactive instead of reactive when looking at financial markets. This sometimes involves going against the grain of mainstream thinking. This can be hard for many folks. Believe me, it’s not easy being a contrarian, but it can be fun, and more importantly, profitable.

So, no, this time is not any different than all the others. When the turn comes, traders that buy high will lose and those that sell will avoid losing. Those that short in low-risk supply zones with a high profit margin will do well and the majority will lament why they didn’t see it coming. We mustn’t forget that markets never change; it’s we as traders and investors that must change.

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Editors’ Picks

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD softens to near 1.3600 as BoE hints further rate cuts

GBP/USD softens to near 1.3600 as BoE hints further rate cuts

The GBP/USD pair loses ground to near 1.3610 during the early Asian session on Monday. The Pound Sterling softens against the Greenback amid growing expectations of the Bank of England’s interest-rate cut. Traders will take more cues from the Fedspeak later on Monday.

USD/JPY drops back below 157.00 on Japan's verbal intervention

USD/JPY drops back below 157.00 on Japan's verbal intervention

USD/JPY has come under moderate selling pressure below 157.00 in the Asian session on Monday. The Japanese Yen lost ground to near 157.70 following Japan’s ruling Liberal Democratic Party's outright majority win in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi. However, JPY buyers jumped back and dragged the pair southward on FX verbal intervention by Japan’s Finance Minister Katayama.


Editors’ Picks

USD/JPY drops back below 157.00 on Japan's verbal intervention

USD/JPY drops back below 157.00 on Japan's verbal intervention

USD/JPY has come under moderate selling pressure below 157.00 in the Asian session on Monday. The Japanese Yen lost ground to near 157.70 following Japan’s ruling Liberal Democratic Party's outright majority win in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi. However, JPY buyers jumped back and dragged the pair southward on FX verbal intervention by Japan’s Finance Minister Katayama.

Gold eyes acceptance above $5,000, kicking off a big week

Gold eyes acceptance above $5,000, kicking off a big week

Gold is consolidating the latest uptick at around the $5,000 mark, with buyers gathering pace for a sustained uptrend as a critical week kicks off. All eyes remain on the delayed Nonfarm Payrolls and Consumer Price Index data from the United States due on Wednesday and Friday, respectively.

AUD/USD: Buyers eyes 0.7050 amid upbeat mood

AUD/USD: Buyers eyes 0.7050 amid upbeat mood

AUD/USD builds on Friday's goodish rebound from sub-0.6900 levels and kicks off the new week on a positive note, with bulls awaiting a sustained move and acceptance above mid-0.7000s before placing fresh bets. The widening RBA-Fed divergence, along with the upbeat market mood, acts as a tailwind for the risk-sensitive Aussie amid some follow-through US Dollar selling for the second straight day.

Top Crypto Gainers: Aster, Decred, and Kaspa rise as selling pressure wanes

Top Crypto Gainers: Aster, Decred, and Kaspa rise as selling pressure wanes

Altcoins such as Aster, Decred, and Kaspa are leading the broader cryptocurrency market recovery over the last 24 hours, as Bitcoin holds above $70,000 on Monday, up from the $60,000 dip on Thursday.

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

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