The markets had a massive rally on Friday, soaring over 3%. Just a bear market relief rally perhaps? Or have we seen the lows for this most recent correction?
I will say this. The negativity surrounding the market is almost deafening. Similarities abound to other pullbacks and corrections. The lows to start 2016 had a similar tone with negativity hitting an extreme. Just like today bearishness was all around.
Stocktwits $SPY sentiment was 24% bullish and 76% bearish. An incredibly slanted view of the market. And those uber bears were out prepping the world for a looming recession and that annual call for a market crash that didn't pan out in 2010, 2011, 2012, 2013, 2014, 2015, looked oh so right in 2016....
— UPBOptionMil (@UPBOptionMil) February 11, 2016
That reading ended up marking a low for the market. The market crash of 2016 was not to be...
Fast forward almost 10 months and the market was pulling back into the 2016 presidential election. The SP500 fell 9 consecutive trading sessions into election week, awakening those bears again...
Those same uber bears who were penning the end to the bull market, were at it again. This fake market was about to collapse....and yet not only didn't it collapse, the market has another massive rally.
The $SPY went on to rally from $200 to over $290 before falling at the end of this year.
And guess who is back telling the world the stock market is a fugazi? Those same bears. Perhaps this time they will be right.
Their carefully crafted charts with the big red arrows will finally conform to their decidedly bearish views.
The irony... and I have pointed this out so many times before - their arguments for why the market will fall are the exact reasons why the market continues to rally. The Federal Reserve and every Central Bank this side of the Gamma Quadrant have opened the Pandoras box to inflate asset prices. Period. Exclamation Point. End of Sentence.
It's no coincidence that Powells hawkish comments near the record highs for the market sparked a sharp pull back for the S&P500, as much as its no coincidence that Powells comments on Friday helped spark a rally in risk assets. Clearly the FED moves the market and the market also moves the FED, as evidence by this most recent pull back.
Perhaps the market has finally topped. And those same bears who have been calling this market a fugazi since 2009 will be right this time. After suffering one of the worst months on record this past December, the market and its participants are shaken. Is this the start of the long awaited bear market? Did this past September mark a top for this market, with prices we will not see again for a long long time? Or is this most recent pull back just another great buying opportunity, with new record highs waiting for us down the road?
I think with the FED holding back on interest rate hikes, corporations buying back their stock at prices some 20-30% less than they were paying just a few months ago, a stock jobs market, and perhaps a positive resolution to the China-U..S. trade conflict those bearish bloggers will have yet another opportunity to call this market a fake down the road.