This is not to say there won’t be a few more surprises in the making as we go along but in most cases the end of any given cycle will be in our favor. Some of these surprises are:

  1. The market has hit the resistance lines in recent cycles. In a bull market, you can expect the stock to break out of its support level. In a bear market, you can expect the stock to break out of its support level and go lower. The reason why these levels need to be broken is because when the market is in a period of excess, it tends to go lower than we think. This has happened in the bull market. As a matter of fact, there has not been much change in the stock market, yet in the aftermath of the stock market going lower, investors are betting the market will break out of the support level.
  2. The market has had its say. When we are in periods of excess, we will see volatility lower than what the stock market will usually see, and volatility is a good indicator of the market’s health. In a bull market, stock volatility will tend to be higher than normal. During a bear market, stock volatility is always lower than normal and therefore the stock market’s health is often better than