The stock market has two parts: macro and micro.
Macro is about the Fed and its interest rates. But, it is forward-looking that will impact the future.
When interest changes, it impacts the market.
Decreasing interest rates mean the economy wants to expand and grow. Conversely, increasing interest rates mean the economy seeks to contrast and slow.
Micro is about each company’s performance. Therefore, it is backward-looking to summarize past performance.
When a company performs less than expected, the stock price usually goes down and vice versa.
So if you want to know the stock market is in a bear or bull with its correct valuation, you should ask how Macro and Micro go about.
For instance, during a current bull run, the tech stock has recovered some of its loss and many people think the bull run is coming.
Unfortunately, the micro data suggests that companies did not perform well in the past and interest rate continues increasing to reduce the chance for firms to generate more profits.
Then, the market will go down eventually.