10Nov11:27 amEST

Be Prepared for This to Happen

As we have been discussing with Members for a while now, we are still operating in the middle stages of a protracted bear market, which means persistent rallies seemingly coming out of nowhere are the rule, not the exception. 

Headed into 2023, however, I expect that to change as the bear claws come out for the next leg down, as the middle stages give way to the next stage: Fear, panic, and emotionally indiscriminate selling virtually across the board with volatility surging.

But not just yet.

With a cooler CPI print this morning coupled with seasonally bullish flows, the uncertainty of earnings and the midterms (mostly) behind us, hints at Russia backing off a bit, and the Dollar/rates moving lower, overzealous shorts in many spots continue to get punished just when it looked like they were positioned for a decisive victory--If you do not believe me just look at most of ARKK's holdings going from zeros yesterday to heroes today. 

Again, bears will eventually get that decisive victory. And I intend to be right there along side them on the financial battlefield. But to attack right now is to give away one's position to the enemy, so to speak. And I will remain patient and tactical. 

So, here is what you need to be prepared to see into year's end: Today's bears will become tomorrow's bulls. Those who were shorting and calling for a hot CPI print, for example, will eventually give up and call for a new bull market by Christmas. And that may very well be the best time to build shorts into 2023. 

Yes, inflation may be easing down a bit. But the reason why "There Ain't No Such Thing as a Free Lunch (TANSTAAFL)" stands the test of time as an old saying is because it is true--Inflation is receding because we are in the very early stages of a deep recession. And when that runs its course, sadly, inflation will come roaring back during the next bull run (which means buy commodities into the blood, not growth stocks!). 

For now, I am staying tactical and laying off the short side. The precious complex continues to improve to little fanfare, especially with the focus in swirling crypto headlines out there.

We're On to the CPI Market Chess Prices Are Goin...

 
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