Like people, markets (including individual stocks, commodities and currencies) have ‘character.’ As we trade, we get accustomed to a certain set of behaviors associated with the market’s current character.

In normal people, character traits don’t change much, but unlike most people, markets are inherently ‘bipolar.’ In other words, they tend to express two different styles of character, which we commonly refer to as bullish and bearish.

Having a bipolar character structure, however, is considered a psychological disorder. Individuals with this disorder tend to suffer a great deal and they almost always drive the people around them crazy.

Markets can switch polarity rather suddenly. We need to be psychologically prepared for such shifts or we will be thrown off balance, trapped wrong-footed.