Bull or Bear: Why I'm Preparing for a Pivot
Friday, October 24, 2025. The S&P 500 closed at 6,791.69. Another all-time high. Again.
That's the headline everyone's celebrating. Record after record. The market keeps grinding higher, and the narrative is clear: soft landing, Fed pivot coming, AI boom continues. Everything's fine. Stay bullish.
But here's what bothers me.
We've seen this pattern before—the relentless grind higher, the comfort, the certainty. Markets don't top with panic. They top with confidence. And right now, there's a lot of confidence.
I'm not calling a crash tomorrow. I'm not even saying we can't push to 7,000 before this ends. But I am saying the signs beneath the surface are shifting, and ignoring them because "the trend is your friend" is exactly how people get caught.
So let's talk about what's actually happening beyond the all-time high headlines.
The Bull Case: Why Optimism Makes Sense (For Now)
Before I explain why I'm positioning for a pivot, let's be honest about why the bulls have a point.
The economy is holding up. Consumer spending hasn't collapsed. Unemployment is still low. Corporate earnings—especially in tech—remain strong. The AI narrative isn't dead; if anything, it's accelerating. Companies are pouring billions into infrastructure, and the winners (NVIDIA, Microsoft, hyperscalers) are printing money.
The Fed is done hiking. After the most aggressive tightening cycle in decades, the market finally got what it wanted: a pause. Rate cuts are on the table. The "higher for longer" narrative is fading. Historically, once the Fed stops tightening, equities rally. We're seeing that playbook unfold.
Sentiment isn't euphoric yet. Sure, we're at all-time highs, but retail isn't fully back in. FOMO is building, not peaking. VIX is low but not at panic-low levels. Positioning data shows hedge funds aren't massively long. There's room to run.
Momentum works—until it doesn't. The trend is undeniably up. Fighting it has been expensive. Shorts have been squeezed repeatedly. The path of least resistance is still higher.
I get it. The bull case is rational. It's worked for five years—from the post-COVID lows to now. Small corrections, sure, but nothing that really hurt. The trend has been relentlessly up.
But rationality and sustainability aren't the same thing.
The Bear Case: Why I'm Preparing for a Pivot
Here's where it gets uncomfortable. Not because I want to be a permabear or contrarian for clicks. But because when I look at what's happening beneath the surface, I see patterns I've seen before—right before things break.
1. Divergence Between Asset Classes
Gold is at all-time highs. US Treasuries are rallying. These are classic flight-to-safety moves. Meanwhile, equities are also at all-time highs.
That shouldn't happen together. When smart money is rotating into safe havens while retail piles into stocks, it's not bullish—it's late-cycle behavior. Someone's hedging. Someone sees what's coming.
2. The Pattern: Down 1, Up 3
Look at the daily moves over the past few months. Market drops one day, grinds back up over three. This isn't healthy price action—it's distribution. Large players are selling into strength while retail and algorithms keep buying the dip.
This pattern doesn't last forever. It ends when there aren't enough buyers left.
3. Data Revisions and Reality
Remember when the jobs data looked strong? Then we got revisions: -990k jobs quietly erased months later. The narrative was built on inflated numbers, and by the time reality showed up, the market had already priced in the fantasy.
This isn't manipulation in the conspiracy sense. It's systematic overoptimism in preliminary data that gets corrected later—when it's too late to matter for positioning.
4. Consumer Stress is Real
Credit card delinquency rates are climbing. Auto loan defaults are rising. Student loan payments restarted. The consumer—who drives 70% of the US economy—is starting to crack.
Corporate earnings are holding up for now, but if the consumer rolls over, earnings follow. And when earnings disappoint at 44x P/E (looking at you, NVIDIA), the correction won't be 5%. It'll be brutal.
5. Valuations Don't Care About Narratives
The AI story is real. The productivity gains are real. But real doesn't mean priced correctly. We saw the same thing in 1999—the internet was revolutionary, and every valuation was justified by "new paradigm" thinking.
Until it wasn't.
I'm not saying this crashes tomorrow. I'm saying the foundation is cracking, and pretending it's solid because the price keeps going up is dangerous.
What I'm Watching: The Trigger Points
I'm not waiting for the crash to start positioning. I'm already positioned. But here's what I'm monitoring to confirm whether this pivot happens in weeks, months, or if I'm early (again).
1. The 7,000 Level on S&P 500
Psychologically, 7,000 is significant. Round numbers matter in markets. If we push through and hold above 7,000, it could trigger one final blow-off top before exhaustion. But if we reject hard at 7,000—especially with declining volume—that's a red flag.
2. VIX Behavior
VIX is sitting comfortably low right now. But watch what happens when we get even minor pullbacks. If VIX starts spiking disproportionately on small down moves, it means options markets are pricing in tail risk. That's fear creeping in.
3. Credit Spreads
High-yield credit spreads (junk bonds) are still tight. When smart money starts worrying, spreads widen before equities roll over. If spreads blow out while stocks stay elevated, the divergence won't last long.
4. Sector Rotation
Watch what's leading. If defensives (utilities, consumer staples, healthcare) start outperforming tech and discretionary, that's risk-off behavior. Money doesn't rotate into boring stocks during a bull market—it hides there when things are about to get rough.
5. Economic Data—Not the Headlines, the Revisions
Initial prints don't matter. Revisions do. If jobs data, retail sales, or PMI numbers keep getting revised down months later, it confirms the economy is weaker than the market thinks. By the time the market reprices, it's violent.
6. Liquidity Events
Government shutdowns. Debt ceiling drama. Banking stress (yes, it's still lurking). Fed liquidity withdrawal. These aren't predictable, but they're the match that lights the fire when everything's already dry.
I'm not predicting. I'm preparing. These are the signals that tell me whether the music stops in Q4 2025 or stretches into 2026. Either way, I'm watching.
What I'm Doing (Not Advice, Just Transparency)
Let me be clear: this isn't financial advice. I'm not your advisor. I don't know your risk tolerance, your timeline, or your portfolio. But I do believe in transparency, so here's my approach.
I'm Positioned for a Downturn
I'm short on the S&P 500 through a combination of futures and sold call options. This structure does two things: it gives me directional exposure to the downside while collecting premium from the calls I've sold.
Why this approach?
Theta positive: The sold calls generate income even if the market stays flat or grinds slowly higher. I'm being paid to wait.
Flexibility: If the market pushes to 7,000 before rolling over, I'm not facing liquidation. The position is sized to handle that scenario—it's uncomfortable, but survivable.
No constant bleed: Unlike buying puts, I'm not hemorrhaging money to time decay. The structure works with time, not against it.
This isn't reckless. It's structured. I can handle being early. What I can't handle is being unprepared when the pivot comes.
Cash is Ready
The goal isn't just to profit on the way down. It's to have dry powder ready to deploy when quality assets are on sale. That's the real opportunity—buying in the panic, not just surviving it.
What If I'm Wrong?
Let's be honest: I could be early. I could be wrong entirely. The market could grind to 7,500, the soft landing could happen, and I'll have missed the upside.
If that's the case, I'll take the loss, reassess, and move on. I've been wrong before—Warren Buffett has made mistakes too—and I can be wrong again. But being wrong doesn't mean destruction. It means lost opportunity and time.
And I'd rather be fearful when others are greedy than greedy when others are fearful (cit. Warren Buffet).
The downside of being early? I wait longer and collect less premium on the way up.
The downside of being late? I'm caught holding the bag when everyone realizes the music stopped.
I know which risk I prefer.
The Bottom Line
The S&P 500 closed at 6,791.69 on Friday. Another all-time high. The headlines are bullish. The trend is up. The consensus is clear: stay long, stay optimistic.
But consensus isn't analysis. Trends don't last forever. And all-time highs don't protect you from what comes next.
I'm not calling the top. I'm not saying it crashes Monday. What I'm saying is this: the signs beneath the surface are shifting. Gold at all-time highs while equities rally. Credit stress building. Distribution patterns forming. Valuations stretched.
You can ignore these signals because the price keeps going up. Or you can prepare for what happens when it doesn't.
I've chosen to prepare. I'm positioned for a downturn, not because I'm a permabear or love being contrarian, but because the risk-reward no longer makes sense at these levels. The upside from here? Maybe another 5-10% if everything goes perfectly. The downside if I'm right? 20%, 30%, maybe more.
I'd rather be early and wrong than late and caught.
So ask yourself: are you positioned for what you hope happens, or for what could actually happen?
Because hope isn't a strategy. And all-time highs aren't a guarantee.
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Disclaimer
This content is for informational and educational purposes only. Nothing in this article constitutes financial, investment, legal, or tax advice.
I am not a registered financial advisor. I do not know your financial situation, risk tolerance, investment objectives, or time horizon. The strategies and positions discussed here reflect my personal approach and should not be interpreted as recommendations for you to follow.
Markets are inherently risky. Trading futures, options, and leveraged instruments can result in significant losses, including losses exceeding your initial investment. Past performance—mine or anyone else's—does not guarantee future results.
Do your own research. Consult with a qualified financial advisor before making any investment decisions. Any action you take based on information in this article is strictly at your own risk.
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