You Can't Stop What's Comin', That's Vanity

One phenomenon I have noticed of late has been market pundits bemoaning the lack of a true, washout capitulatory bottom. On CNBC, morning anchor Joe Kernan has been wondering aloud on a daily basis whether we need to see the VIX pop above 40 to get us close to a true bear market bottom.

While it may seem like we will never get that washout/crash type of event in this bear market, history says it is coming. Naturally, the precise timing of it is the trillion dollar question. My suspicious is after Labor Day when seasonality is rather grim after mid-September through about the midterm elections in early-November. However, I admit this cycle has tons of known (risks) knowns, known unknowns, and perhaps even a few unknown unknowns luring out there which can throw a wrench in just about all markets. 

Much of the debate centers around whether you believe we are in fact in the midst of a major bear market or not.

I do not believe The Fed can achieve the elusive "soft landing" this cycle, and expect the market to eventually melt down because of that reality. History, technicals, macro, and long-term dynamics are on my side with that thesis. If you disagree, however, and think we see a shallow recession then, yes, we are probably closer to the end than the beginning.

But even then, there is still risk a washout. 

For now, as previously noted, seasonality actually gets more bullish into July, what with summer vacations underway and Independence Day giving some old fashioned optimism in America, if only for a couple of hot dogs, beers, and beach days while the hot sun shines. 

Overall, in the very near-term with ARKK clearing its 20-day moving average upside as we speak, I continue to lay off shorts and will hold my fire there for a major counter-attack later in the summer potetnially when just about everyone else has given up on a major new leg down.