What happened last week.
What we're watching for
next week.
The end of the correction or a bear market rally?
Several months ago I called for a correction of 12-15%. We got it. Now the question is whether this the end of the correction or just a bear market rally that will peter out quickly?
Subscribers to my Monthly Intelligence Report know the answer to this question. For the rest of you, it's a coin flip. Should you sell into this rally, or wait for another leg down to buy at cheaper prices? If you have a plan, you know what to do next. If you don't have a plan, you should get one. Seriously, dude, you should get one.
Chart 1. S&P periodic returns.
There is plenty of good news about what's happening in the market lately. The chart below shows that the 1-week, 1-month, and YTD returns are positive. Yipee! But wait a second. The 3 month and 1 year returns are still negative. Rut-Row. Is this rally just a flash in the pan, or can it turn into something greater? Time will tell.
Chart 2. Distance from Key Markers
The next chart reinforces what we saw previously - a market that is rallying on a short-term basis but is still under water.
Chart 3 - chart of the week
The table below shows the returns of the main investment strategies we track. Note that there was only one strategy that had a negative return - the Smart Money Pairs. This isn't unusual for this strategy, and it often produces returns that beat the market by a wide margin.
Final Thoughts
We've had a nice rally in the market. But I'm not yet convinced that we will make a new high before we finally succumb to the next bear market.
I could be wrong, of course, but I follow my models and they are showing increasing risk and diminishing prospects for a new high.
For a full analysis of the probability of a bear market or a new recession, see my Monthly Intelligence Report.
As always, if you like what you see, or have suggestions for improving this recap, leave a comment below, or email me at info@zeninvestor.org