We are headed for a big market downturn.
That may not be apparent to everyone. But individuals who know what's coming will benefit.
Such foresight depends on recognizing and heeding key indicators. Sometimes these indicators are not obvious. But they reveal trends that can help investors make wise decisions.
One such indicator of stock market trends is Google searches for the words "bear market." Recent data on such searches suggest the coming of a bear market. There is a precedent for drawing this conclusion.
Shortly before or during past down cycles, there was an increase in "bear market" searches. The more bear market searches, the greater the likelihood of a bear market. The fewer the "bear market" searches, the greater the confidence among investors, and that a bull market will endure or launch.
The current market unpredictability now has more people searching for this term.
Reading Data Points
Everyone reads data differently. Some traders follow market sentiment. They believe it's safest to ride momentum. Others see mass market sentiment leaning in one direction to take a contrarian view. They believe that if there is a bull market that it will soon become a bear market, and vice-versa.
Even when market conditions are good, it is telling when many people are searching for "bear market." Many of these people are sophisticated investors and traders, market influencers. They are looking for information. Their success depends on their ability to anticipate trends -- to be proactive so they can adjust their portfolios before they take a hit or to maximize gains.
Light Blue Map Means a Bull Market
The graph below shows different shades of blue. The lighter blue colors mean fewer searches for the term "bear market." This is when educated traders are bullish on the market and buy more shares. The dark blue states reflect bearishness.
When the chart is light blue, expect higher stock market prices. When it's dark blue, expect lower prices.
Consider the two charts and graphs below. The one on the left shows what educated investors were doing with their money before the bear market of 2008 and the final washout low in 2009. The one to the right shows today's Google trend.
The charts are similar. They paint bearish pictures.
Now consider the bottom of this image where you see searches on "bear market "in the USA over time. This data suggests that we are days or weeks away from a significant market top in stocks and the start of something that will wipe out most individuals life savings.
Google searches for "bear market" can help savvy investors identify market trends. The current map for "bear market" searches resembles the map in the 2008 Great Recession. By observing these maps, investors can adjust their holdings appropriately.
This article is commentary by an independent contributor. .
Chris Vermeulen is full-time trader and research analyst for TheGoldAndOilGuy Newsletter.