Bear Cave 2 (Bull Allowed)

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Investors tend to underrate cash, not realizing the importance of keeping a high cushion--not for safety but to make future purchases into panics.


More than half of the money I made from investing in the current century was from buying into panics and selling into subsequent rebounds. If you remain too heavily invested through a misguided Boglehead attitude or for any other reason then you will not only periodically suffer outsized losses but, even more importantly, you will not have enough cash to make heavy purchases into all important bottoming patterns. Many subscribers in March 2020 told me they hadn't listened to my urgent requests to sell in January 2018 and January 2020 and therefore only had enough money to make minor additions to their portfolios.

Kaplan
https://truecontrarian-sjk.blogspot.com/

 

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TLT daily: It looks like a gap down at the open and another lower low.

 

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At a rapid pace
Guess Brainard didn't check this chart before talking about reducing the BS at a rapid pace. Last time Fed reduced the BS, MOVE index moved sharply higher and was a huge problem for markets. This time around things are obviously much more extreme. Regular readers of TME know our general take on volatility and Fed: Fed has distorted volatility markets. The steep rise in bond volatility, MOVE index, shows just that Fed can't manage "everything". How will this MOVE when they start shrinking it?
https://themarketear.com/

 

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The behavior for the S&P 500 Index in 2022 is somewhat similar to 2008 although the spring rebound appears to have ended earlier this year than in 2008.

I'm not sure how relevant the past bear market is to the current one but it is interesting to observe how nearly all bear markets feature surprisingly similar chart patterns:

Kaplan

https://truecontrarian-sjk.blogspot.com/
https://twitter.com/TrueContrarian?ref_src=twsrc^google|twcamp^serp|twgr^author

 

[robo]

Gary Shilling: Sell Stocks; A Recession is Coming
by Robert Huebscher, 3/30/22

volatility in U.S. equities is typical of a market top and is a warning sign of an imminent decline, according to [A. Gary] Shilling.
The question is whether to ride it out.
His research demonstrates that buy and hold is not a better strategy than trading.
If one excluded the 50 best performing post-war months, the return from equities was no better than from Treasury bills.
But avoiding the weak months was more important.
It is “grade-school math,” according to Shilling:
If you lose 50% of the value of your assets, you must make 100% to get even.
“Take a lot of money off the table,” he said.
Stocks are very expensive.
The 10-year CAPE ratio is 37.4 versus its average of 17.1.
It would take a 55% decline to get back to the long-term CAPE [cyclically-adjusted price-earnings ratio] average and, Shilling warned, markets usually overshoot to the downside.
Stocks are vulnerable because the Fed is “behind the curve,” he said.
When the Fed starts hiking rates, a recession follows most of the time.
“A soft landing is very much against the odds,” Shilling said.
--Robert Huebscher, "Gary Shilling: Sell Stocks; A Recession Is Coming", AdvisorPerspectives.com, March 30, 2022.
https://www.advisorperspectives.com...ry-shilling-sell-stocks-a-recession-is-coming

 

[robo]

NASDAQ - what was gained is now lost
Our main take remains intact, this market needs to consolidate before anything new big can take place. NASDAQ futs remain trapped in the 15200-14600 range for now. We are not getting short term excited until we break that range. Longer term, the 100 crossing the 200 day moving average isn't overly bullish, although last time it happened was close to lows in late 2018 (chart 2).
https://themarketear.com/

 

[robo]

SPX daily: Watching the show....

SPX technicals
The break out above 4500 has basically been reversed. Spoos is down 100 points since recent highs, trading right at the 100 day moving average. The big support to watch is the 4500 level, while 4620/4650 remains the resistance area to watch. Maybe this market needs to consolidate here for the short term as there are few new strong narratives. We are not getting excited until we close above/under the range.

https://themarketear.com/

 

[robo]

Well, we shall see! The QQQ's are having some trouble....

Bear market rally is now over
Mike Wilson thinks the bear market rally is now over. Friday's ISM manufacturing survey shows the orders component is now below inventories for the first time since the expansion began. This book-to-bill proxy for the broader manufacturing sector suggests meaningful downside to the headline ISM over the next few months, which doesn’t bode well for the S&P 500… PMI of 52-54 by April / May = 3600-3700 (see below). He continues to recommend defensive positioning, and notes the market has been paying more for dividend yield rather than dividend growth since late last year, which suggests growth is becoming the primary concern for equity investors. Still pushing the Long Utes / Short Fins pair trade
https://themarketear.com/

 

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TLT daily: Filling the gap.....

 

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SPY daily: Back testing the 10 dma......

 

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QQQ daily: Failed to hold above the 200 dma, and is now back testing the 10 dma.....

 

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QQQ daily: Having some trouble (resistance) at the 200 dma.

 

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SPY daily: Watching the 10 dma, but where is the end of the month window dressing BEEF!

 

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SPY daily: The trend remains up! A back test of the 100 dma and the 10 dma has held so far.


Investors are back in risk-on mode
Jason Goepfert
Jason Goepfert
Published: 2022-04-01 at 07:35:00 CDT
Investors move back to risk-on

The SentimenTrader risk-on/off indicator has now cycled from risk-off to risk-on. Dean showed that the indicator utilizes a weight-of-the-evidence approach by combining 21 diverse components into a single model to assess the current market environment. A level above 50% is considered risk-on.
https://www.sentimentrader.com/blog...l&utm_term=0_1c93760246-d7e2fcb3fe-1271291994

 

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SPY after the close: We shall see what tomorrow brings.... I'm sure the cycle dudes will be updating their counts soon. The 100 dma did hold.... A back test of the 10 dma is normally after a big run like this one....

 

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SPY daily: A possible back test of the 100 dma be coming our way. We shall see if it holds.... I thought we would see more buying since we are close to the end of the month window dressing. Maybe tomorrow!

A closer look....

 

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Remember extreme stress?
Recall when the VIX 2/8 months futs spread was exploding and managed marking the SPX lows a few weeks ago. The VIX spread has come down substantially since then. The contrarian signal worked this time again, but things are not as "clear" from here. We are still in wait and see mode with a preference to start getting involved in some early long vol trades/hedges.

TLT - haven't seen this in a while
TLT is pushing above the steep short term trend line. This could develop into a rather violent squeeze given the bond consensus and the fact we are breaking up from a wedge like formation. Imagine the pain should we try the 50 day. This market continues frustrating the crowd, so why not a proper TLT squeeze.
https://themarketear.com/

 

[robo]

Put hate is back
Nothing really unexpected, but the crowd loaded up on puts at recent lows has seen all that put premium evaporate quickly as both direction and volatility has gone against the late hedgers. We are now reaching the lowest levels for the put call ratio since the squeeze began. So many PMs have explained that hedges only cost money over the past days. We are getting closer...
https://themarketear.com/

 

[robo]

SPY 2 hour chart: All I can say is NICE! Is it topping? We shall see.....

Bottom Line: The trend remains up!

 

[robo]

David Rosenberg
@EconguyRosie

Mar 23
Check out the latest edition of my YouTube series Navigating the Noise – Fed Policy Mis-Step Now; Recession Later

https://twitter.com/hashtag/NavigatingtheNoise?src=hashtag_click

Fed Policy Mis-Step Now; Recession Later
https://www.youtube.com/watch?v=hEye30rCHBE&t=10s