If that was the bull market peak...

Major selloff this week. So, was that it? Did we just witness a blow-off top to cap this 9 year bull run? Well, I've been saying repeatedly on this blog: Bull market peaks are made when there is tight money and euphoria/greed. There was definitely flashes of the latter with the bitcoin craze and weed craze which I think are over, but we didn't see tight money because inflation, although picking up, is not a problem at this time.  The yield curve did not invert and therefore, no recession would appear on the horizon and that's what ends bull markets. In 1987 there was a similar situation where the market had been soaring for months, greed was in the air and there ended up being a 25% crash. It's debatable as to whether you can call the 87 crash a bear market. To me, I look at it as a major pullback in the bull market that began in 1982 because the drop was swift and short lived.  Be prepared for the possibility of this type of drop because the markets have simply gone up in a straight line for a year. The trigger of the 87 crash was arguably rising bond yields in the face of a market that had been so strong for months and that made people start to get jittery. Then a bill got passed that made mergers & acquisitions less appealing (M&A was in a frenzy at the time) which created more selling pressure and then there was the popular use of portfolio insurance, which arguably was the straw the broke the camels back and was largely responsible for creating the biggest one day market collapse in history. This time around we have rising bond yields. We don't have portfolio insurance but what we do have is a mindless amount of ETF buying that took place during the past couple years. If sentiment turns negative let's see how how the appeal of low fees holds up during a  meltdown whereby ETF holders have no escape as they are held hostage to the indicies. ETF selling could exacerbate a correction into a full blown panic especially if there is leverage behind these purchases.

Be very careful at this junction. Markets could have ST bounce but I suspect that we are going to see a much larger correction at some point to clear out the excesses that have accumulated. I expect to see YTD gains wiped out at the very least. So, bottom line I don't believe we are entering a bear market but it may feel like one soon enough.