14Mar3:19 pmEST

Way Too Serene to Be a Tradable Rally

If you agree with my view that we are in the early stages of a new bear market, then the first major leg down of said bear market tends to not bottom unless and until we reach an interim selling climax wherein market players finally, begrudgingly, exhort, "Fine, I'll admit it! We are in a bear market!"

At that point, a genuine relief rally can then proceed for a number of days, weeks, even months. 

A classic example of this event occurred after shares of Bear Stearns cascaded and the firm was bought out by JPM for $2 per share. That actually occurred on March 16th, 2008. So, right around this exact time of year. For the following months, we saw a tradable bounce in equities which convinced the majority the worst was over (it was not). 

But my point regarding the current market is that we are not quite at that Bear Stearns moment for even a tradable, interim low--"A" bottom but not "The" bottom. 

No, even with junk bonds (below, on its daily chart) seeing their bottom fall out as The Fed exits that market as an active buyer since the pandemic, we really do not have veery much fear and panic out there, let alone longs grudgingly admitting it is a full-blown bear.

Instead, we have constant rally attempts which fail, overnight futures pumps on a supposed cease fire which never comes, wishful thinking that The Fed will be "dovish" this week, pounding the table that tech and stocks "always come back," so ya gotta buy here. Mind you, I am not mocking these views per se. I am merely stating that the requisite sentiment we so often see to get a tradable rally after the type of selling and price action we have seen and are seeing now just is not there, well at least not yet. 

However, with AAPL TSLA AMZN GOOGL starting to finally wobble, we may be setting up for it this week into next. After all, the consensus seems to be that the FOMC will be bought either way, as a form of "sell the rumor, buy the news."

But in a bear market, surprises are often to the downside. And if you agree with my view, then this action and sentiment is still too serene to market an actionable long entry into the FOMC. After it? Well, I would not rule out the market having a Come-to-Jesus moment when it finally dawns on it that the sanguine outlook may have been for naught what with a Fed which has no choice now but to try to cool off inflation when they are way, way behind the curve. 

Hello, Friends: A Value Play... How I See This Scene Playing...


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