With the correction in the S&P500
now confirmed (>10%), many are asking, what happens next? Is this the start of the long-awaited bear market? Given that there does not seem to be a significant enough catalyst for this as of yet (although some are pointing to interest rate hikes and so on), I prefer the assertion that the current equity market correction is a reversion to the the wider macro uptrend. This aligns with fundamental valuations somewhat, in that key valuation ratios such as PE, PEMAX, and, in particular, Shiller's CAPE ratio, have all reached high levels comparative to key periods throughout history. A correction in this sense is required, or even healthy. In viewing history, we can see that a key predictor of the final phase of a bull market is the hype and FOMO that causes sideline observers to jump in to the fray en masse, chasing momentum with no recognition of valuation. This does not appear to have occurred as of yet, and so for now I retain my assertion that the recent market activity will remain a correction, rather than a sustained bear market.
I do not pretend to predict what will happen next, and am watching closely like all other market participants for material (and fundamental) changes in the landscape.