11May2:56 pmEST

Reminder: It's a Bear Market, Which Means We Tend to Make New Lows

Part of the nefarious nature of bonafide bear markets (as defined by price below a declining 200-day moving average on the major indices for an extended duration, not the short-lived COVID crash which came and went in a matter of weeks) coming off an extended period of rampant speculative bull market fervor is that they lull even smart, seasoned, market veterans into the trap of constantly calling bottoms. 

Indeed, we will bottom sometime in the future and experience another explosive rally even if it is ultimately a doomed rally within an ongoing bear. But the timing of it remains so elusive precisely for the simple reason that we are in a bear market.

And, yet, so many market players fail to take time and reflect for just a bit on that phrase. Beyond the standard, canned and sealed "20% off the highs" bear market definition, the true essence of a bear market is a strong trend of lower highs and lower lows with sporadic, intermittent periods of sharp short squeezes to keep bears in check.

In the current market, the QQQ ETF lost $296 support earlier today printed new 52-week lows (actually, the lowest level since November 2020).

Despite that, we have even more calls for a bottom in place. Mind you, this is all happening as ARKK, crypto, MSTR, Tiger Fund, and a plethora of richly valued growth stocks with little-to-no earnings and tons of debt/leverage display legitimately concerning signs of distress as retail investors hold and hope for another rally to bail them out. 

All of this is happening as the VIX is essentially yawning, at least for now. 

Simply put, this is typically not the grounds for a strong case for declaring a major market bottom worth the time, energy, and of course money. 

This is a bear market, which means we tend to keep making new lows, regardless of what David Tepper is doing, a fancy historical proprietary indicator says, or what Warren Buffett did in the 1980s. 

And After All That... The First Mover Fallacy in G...


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