Everyone loves a bull run—until it turns into a trap. One day your portfolio is green and glowing, the next it feels like gravity turned on. The hardest question for investors isn’t whether the market goes up or down long-term—it’s knowing when the music is about to stop.
So, how do you tell when the stock market has peaked? There’s no crystal ball, but there are signals—psychological, technical, and fundamental—that traders have learned to respect. Let’s cut through the noise and look at the ones that actually matter.
1. Euphoria in the Air (a.k.a. Your Uber Driver Talks Stocks)
Markets rarely crash when everyone’s terrified. They usually peak when everybody thinks it’s safe and easy money.
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If the evening news anchors are suddenly “stock market experts,” pay attention.
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When cocktail parties turn into trading seminars, that’s often the top.
It’s not about one person bragging about Tesla—it’s about mass overconfidence. That’s the smell of danger.
2. Technical Divergences: Price Up, Momentum Down
A sneaky warning sign: stocks hit new highs, but indicators like RSI or MACD are quietly rolling over.
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Price makes higher highs.
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Momentum makes lower highs.
That’s called a divergence, and it’s like a car speeding up a hill while the engine sputters. Eventually, it stalls.
3. Volume Dries Up
A rally without volume is like applause without people—fake.
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True bull markets have strong volume when breaking highs.
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If you see new peaks but lighter and lighter trading volume, it’s often a last gasp before sellers take over.
4. Insider Behavior: Follow the Smart Money
Executives know their businesses better than analysts. If CEOs and CFOs are dumping shares while cheerleading growth on CNBC, that should raise an eyebrow.
Heavy insider selling near highs is often a quiet signal that insiders think “this is as good as it gets.”
5. Macro Stress Cracks Appear
Markets don’t peak in a vacuum—they peak when cracks show up under the surface:
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Credit spreads widening.
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Yield curve inversion.
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Central banks turning hawkish after years of easy money.
Think of it like the weather changing before a storm. The sky looks calm, but the pressure is building.
The Brutal Truth: Peaks Are Only Clear in Hindsight
No single indicator will scream: “Hey, this is the top!” Peaks are slippery because human behavior makes them messy.
But if you see euphoria, divergences, drying volume, insider selling, and macro cracks all at once—that’s your signal to stop dancing too close to the exit.
The market will always have another rally. Your job is to survive long enough to catch it.
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