DENIAL PHASE

We are in the middle of the Denial Phase. Meaning the market, like SP500 is at historical high and made a clear break out of 14 years ranging period just in 2013, but vast majority of investors ignore this movement and the bullish sentiment fact and just waiting for the big drop and don’t want to believe the market is going new highs. They still argue with the 1.900 point high S&P500.

This is the Denial Phase pattern. Good Morning Fellows! This is a break out and the bullish rally just started last year!!! Take a close look at the chart below.

At the Denial Phase the investors start to rationalize their decisions for holding their short positions further, but as the market continues higher and the losses continue to mount, denial turns into fear, that confuse traders and all of them being more and more frustrated.

Generally bull markets go through three psychological phases:

• Denial
• Concern
• Capitulation

Recently we are the Denial Phase only. For some traders the capitulation will come in a few months or in years. During the Denial Phase the majority of investors are still bearish and want to see the market fall back shortly from the prior tops. They look upon the new daily records as merely another selling opportunity and think that stocks are pricey.

In shorter term on daily S&P500 chart I present you below how works the Denial Phase.

In theory works like this:

The BFM Assets Team.