Bear market rallies tend to be "fast, furious, and prone to failure." - Hussman
I expect this current sucker rally to continue at least to next week. Maybe an impressive rise. But you never know. If I was still stuck with longs that made me nervous (I'm not
) I might use any temporary rally to unload at a better price than I am likely to find later.
End of quarter
Window Dressing https://www.investopedia.com/terms/w/windowdressing.asp, temporary oversold conditions are pushing this until July.
Assuming no massive negative catalysts between now and end of Q2.
I would expect pain to recommence start of Q3. Things might get really sporty once Q2 earnings start coming in mid-July. Then 0.75-1.0 BSP rate raise again next meeting.
I see some pundits sure that the market\economy pain will cause the Fed to pivot by Sept. I absolutely reject that thesis. First, this is not the same Fed as previous years. This set of voting members are majority hawks and they are quite done with the pain and risk too much loose money for too long has caused. I think those hoping for a pivot to save this bloated market are engaging in magical wishful thinking.
When inflation is under control they might pause rate hikes, but that is not enough to prevent the market from trending back toward historical trend norms, which would be a lot closer to around S&P 2000 line.
Short of near societal collapse, don't expect a lowering of rates with this class of Fed voters. Setting a broken bone hurts, but you got to do it.
They're quoting Volcker for cripes sake. That's like a President quoting Lincoln. You know you are in for some pain then.
"Near the top of the market, investors are extraordinarily optimistic because they've seen mostly higher prices for a year or two. The sell-offs witnessed during that span were usually brief. Even when they were severe, the market bounced back quickly and always rose to loftier levels. At the top, optimism is king, speculation is running wild, stocks carry high price/earnings ratios, and liquidity has evaporated. A small rise in interest rates can easily be the catalyst for triggering a bear market at that point."
- Martin Zweig, Winning on Wall Street, 1986
"The greed itch begins when you see stocks move that you don't own. Then friends of yours have a stock that has doubled; or if you have one that has doubled, they have one that has tripled. This is what produces bull market tops. Obviously no one rationally would want to buy at the top, and yet enough people do to produce a top. It is really quite amazing how time horizons and money goals can change when there are stocks around that are going up 100 percent in six months. Finally it all turns into a marvelous carmagnole that is great fun if you leave the party early."
- Adam Smith, The Money Game, 1967
