- Fear often marks the beginning of a bullish move.
- Retail investors tend to sell before major uptrends.
- Bear markets start when euphoria blinds investors.
The Role of Fear in Bullish Market Trends
Market sentiment plays a critical role in shaping price trends. Historically, bullish market cycles have begun when fear is dominant. Retail investors, overwhelmed by uncertainty, tend to sell their holdings in panic, often just before the market shifts upward.
Think back to past market cycles—how many times did you believe the bull run was over, only for prices to recover and soar? This pattern repeats because market makers capitalize on retail investors’ emotions.
Euphoria: The Silent Start of a Bear Market
On the other hand, bear markets don’t begin with fear; they start with euphoria. When prices reach new highs and investors stop questioning the market’s sustainability, a downturn is often around the corner. During these phases, the term “bear market” seems nonexistent, and the belief in continuous gains leads to excessive risk-taking.
Where Are We Now?
Looking at the current market, ask yourself: Have you been tempted to sell, thinking it’s over? If the answer is yes, you might be experiencing the fear phase of a new bullish leg up. Smart investors recognize this and position themselves accordingly, avoiding emotional decision-making.
