With each passing week, the case for a bearish reversal out of this stock market rally becomes stronger. For the time being, the bulls triumphed by breaking out of a potentially ugly double top pattern. This raging bullish sentiment pretty much sums up last week’s stock market actions.

There is nothing more detrimental to our psychology than seeing our friends get rich. With each day that stock markets continue their impressive surge, lingering skepticism are transformed into belief and rational people are behaving once again like gamblers.

More on this topic (What's this?)
Sentiment Swings From Bullish To Bearish
How Close are we to a Secular Bear Market Bottom?
Read more on Bear market at Wikinvest

In the short term, technical indicators, measures of confidence, and volatility all suggest that the stock market rally could persist. We are now either in the last stage of the bear reign or the first wave of a primary bull market.

To prepare for the worst, we should picture an unemployed scenario and get serious about bulking up our emergency fund to meet at least six to eight months of expenses. Now I know that saving up six months of expenses is no laughing matter, especially if you are a credit card junkie and have formed an onerous habit of living from paycheck to paycheck.

More on this topic (What's this?)
FNBO Direct drops savings APY to 1.65%
How to Start an Emergency Fund
How to build an emergency fund
Read more on Emergency Fund at Wikinvest