Bull vs. Bear Markets: What Historical 'Temperature' Data Says About Selling Early
Filed under: Investment Strategy | Market Outlook Is It Really “Right” to Sell in Bull Markets and Buy in Bear Markets? A “market temperature” indicator (and what the historical data actually reveals) Few indicators offer a definitive, plain-English signal that a market is overheating. While traditional metrics like trading volume or the Fear & Greed Index provide clues, they often lack a clean, intuitive, and consolidated read. To address this, I developed a proprietary composite score designed around a few core principles: It should be numerical and intuitive at a glance. It must utilize robust, established inputs to allow for rigorous historical backtesting. It should be multidimensional , capturing various facets of market mechanics rather than relying on a single isolated signal. To achieve this, the index combines four core components, each equally weighted at 25%. The Four Core Components 1) Momentum Score Measures price strength relative to its long-term movi...
