By: Vitaliy Katsenelson.
Conditions are ripe for a secular sideways market — a market that moves up and down with a lot of cyclical volatility, but ends up going nowhere for a long time.
Sideways markets happen not because the stock market gods play an unkind joke on gullible humans but because of human emotions. Historically, sideways markets have always followed secular bull markets. At the end of secular bull markets, stock prices become extreme — valuations (P/Es) get highly stretched. Sideways markets are a payback for all the fun and returns stock investors enjoyed during secular bull markets.