Bull market escapes the top, key signals worth noting

What I have done most during this period is to collect and analyze various information, summarize and reflect on my experiences and lessons learned from the start of fixed investment in 2018 to the end of fixed investment in 2020, rather than continuing to look for suitable investment targets, because I think that the prices of almost all valuable currencies are now quite high, and I will not continue to buy at this stage.

Some readers always ask whether a certain token is worth holding on to. In fact, I have repeatedly answered this question. I have not sold any of the tokens I have invested in so far, because I think the bull market will continue and it is still some distance away from the climax.

If we look at this issue from another angle, I can also suggest that if investors really have no confidence in the tokens they bought, they might as well follow their own inner thoughts and operate according to their own ideas. But after the operation, it is best to take notes and write down all your operations throughout the bull market. Then wait until the bull market completely turns into a bear market, and then look back at your previous operations, summarize what is right and what is wrong, especially review your mentality when performing those wrong operations, and find out the reasons. Sometimes the mistakes, regrets and regrets you have experienced in person can make you grow more.

In yesterday's article comments, two readers mentioned that the latest inflation rate in the United States has reached 2.6%. It seems that our readers are very sensitive, and this is indeed a very critical data.

I have shared my speculation on the subsequent direction of this bull market in previous articles. A very important factor affecting the subsequent direction of the bull market is when the Federal Reserve will raise interest rates .

Regarding interest rate hikes, my impression is that the Federal Reserve has said some important things: it probably will not consider raising interest rates before 2023, it will tolerate an average inflation rate of 2% or above, and it will not consider raising interest rates until the economy has fully recovered.

Among these three sentences, I think the first one is to comfort the market, and the last two are the key factors to consider whether to raise interest rates or not.

The second sentence, "will tolerate an average inflation rate of 2% or more", means that the average inflation rate must reach or exceed 2% over a period of time. This is the first time it has exceeded 2%, so if we look at it by this standard, I think the Fed will not raise interest rates for the time being and will continue to observe. If the inflation rate in the United States continues to soar in the next few months, we will have to be very careful. So we have to keep a close eye on the inflation rate in the next few months.

The third sentence, "will not consider raising interest rates before the economy has fully recovered," I think is also the key point. I guess the Fed will consider this factor together with the second factor. So when will the US economy fully recover?

Before discussing this issue, let's take a look at another important piece of information: In an interview on Monday, the president of the Federal Reserve Bank of St. Louis said that if "when the vaccination rate reaches 75%, then we can discuss the issue of reducing QE." What does this mean? It means that the Fed chairman believes that when the vaccination rate reaches 75%, the US economy may be able to recover quickly on the right track.

According to the well-known financial media Bloomberg, at the current rate of progress, the United States will probably achieve this goal in August this year, while another well-known media Zerohedge estimates that this goal will be achieved in June this year.

Combining all of the above information and what the Fed has said about raising interest rates, if we go by the most aggressive estimate, the vaccination rate in the United States will reach 75% in June and the epidemic is gradually under control, and the inflation rate continues to soar from now until June, then I think the Fed will not only consider shrinking its balance sheet, but may really consider raising interest rates.

The most radical time point might be between August and October, possibly at the end of this year, and it is unlikely to be postponed to 2023.

Once the interest rate is raised, the market's bull-bear reversal may come soon, and we will have to prepare for large-scale cash exit.