We Just Witnessed This Cycle's Bear Stearns Bottom

Back in March 2008, several months of the financials selling off fiercely led to an intermediate-term washout known as "Bear Stearns Bottom," as the famed banking house was embarrassingly bought by JPM for $2 per share, forcing the CEO to walk through his own firm's office building with armed security guards for protection. 

As many of you may know, the rest of 2008 proved to be rather difficult for bank bulls, as a fresh leg down came slowly but surely into the hot summer and completely collapsed into autumn. 

In this cycle, we may be in the similar early stages of the TINA/ZIRP trade unwinding tech and names which prospered under the TINA doctrine, such as HD COST, for the better part of a decade. 

With the violent, high volume selling in the likes of Cathie Wood's ARKK and TSLA in recent weeks, those two tickers seem to be at the forefront of this cycle, perhaps even the poster children for it. To be clear, Ms. Wood's style has enabled her to dominate this cycle and she deserves all the credit for it. But that same style, of course, can come home to roost on the other side of the mountain. 

Just as the bearish excitement began to escalate for an imminent market dislocation featuring ARKK and its fallout last week spilling over into Monday of this week, bonds found some support and rates on the 10-Year Note stopped spiking temporarily. Along with the Dollar coming off recent gains, that may be enough to work off some excessive shorts who had pressed for an imminent crash, much like what we saw in the wake of Bear Stearns some thirteen years ago. 

Now, the question is what of the rest of the market? As we have seen with energy and banks in this cycle, alongside dividend value plays like MO, the market is willing to be more rationale and efficient of late than perhaps many would give it credit for doing so. Of course a major dislocation can lead to major correlations and unwinding. But even 2008 took a while to reach that point. 

Thus, while I am playing this market bounce and not shorting here, I am also of the mind that a legitimate "Sell in May" setup could easily be forming setting up an ugly back nine of 2021 for tech as the TINA unwind likely has several more chapters in its novel to go.