Is This Still A Bear Market?
"Are equities still in a bear market rally?", BNP asks, on your behalf, in a note dated Friday.
It's a question worth asking. I often adopt a somewhat fatalistic cadence when making the case that beyond a certain point, normative debates about what "should" be happening or what will eventually happen "if there's any justice in world" are irrelevant when it comes to assessing the state of affairs in the here and now.
For example, back when Bitcoin was at ~$20,000, it made little difference to a
Of course it ‘s still a bear, until the major indices make convincing new highs.
Banks, Russell 2000, Industrials (the leaders) appear to be turning down now.
I can not watch what is happening in the real world and conclude that this is a good time to be in the market.
And I naturally lean “optimistic”.
Yes, but it’s fascinating to watch. We’ve thought that liquidity and cheap money, as opposed to fundamentals, were driving the markets for years. But it’s never to been so flagrant, and how does it unravel?
The problem I see is that even as this market shrugs off crisis after crisis the Ammunition required to fight these issues is NOT unlimited and the mechanisms in use are more and more radical.. We are creating a pattern of diminishing returns in what winds up being a zero sum game in the end and needs the backing of other countries that are not advantaged by our choices. Geopolitics rules inevitably !!
3 Crazy insane selloffs and rallies intraday on Friday, absolutely this is still a bear market. It’s a crapshoot everyday the market is open.
The thing is, hedges like SPY puts seem expensive.
But I guess I should buy a few.
What are people’s allocations here?
I’m 8% cash and 13% bond and titled towards lots of tech names.
But really, I have more faith in equities than bonds to perform their traditional duties right now.
Cash will be king this fall?
During the dark days of March 2020 when the S&P briefly kissed 2200, I started what I considered at the time 1/3 position in many companies I though were a good long term investment, I figured I could probably add another 1/3 after the bear market rally and re-test of the lows and may be the last 1/3 if we went lower. I find it difficult to qualify the bounce back as a bear market rally any more and I took profits on all positions, long term view be damned. The amount of liquidity is indeed winning and more importantly, clouding the use of technicals and fundamentals as trading and investing tools. That said, given positioning it would appear most of the cash moving around is the result of systematic and low vol strategies re-leveraging, fickle as they are I would not be surprised if June options expiry finds those strategies taking another break “a la” February if the popular ES and SPY spot are not rolled. I for once would welcome the return of some negative gamma, it can be nerve racking and stomach churning but at least it feels more real than the version of managed prozac markets the Fed’s liquidity has gifted us.