Is the bear market over?

We saved many of you from the bear market last year.

Of course, everybody now agrees on how obvious the selloff was. Albeit, it was totally different at the top. S&P 500 going over 5000 was consensus back then. Anybody even slightly bearish was dismissed as permabear.

Well, we’re no permabears as you saw over the past decade. Yet, we were one of the few out there who were really bearish at the end of 2021. And you benefited tremendously.

Here is the proof – the excerpt from our New Year’s outlook that we published last year on January 3rd, 2022.

However, the sentiment changed over 2022. In Autumn, everybody adopted the bear case. The so-called “release” thesis, accompanied by a volatility spike, became popular among the large fintwit accounts on Twitter. Even those that admitted a possibility of a bounce saw that happening only after S&P 500 fell to at least 3200 and preferably 3000.

But not us. We told you not to panic!

(4/n)

The data has obviously worsened this month. But our point was that it is not aligned with the 2008 analog everybody is obsessed with right now.

There will be time to panic, but it is not now. A few important pieces are still missing.$SPX $SPY #ES_F $IWM $QQQ

— SpreadCharts.com (@SpreadChartsCom) September 28, 2022

And we were proven right once again.

 

What happens now?

The narrative has been slowly evolving around the Fed pivot. Decelerating inflation, followed by a broad CPI decline in December, convinced some that Fed is done and we’re witnessing the start of a new bull market.

We disagree. The bear market is not over.

Why?

Well, we explained it thoroughly in the latest New Year’s outlook a few weeks ago. We also revealed the best strategy for the upcoming year. All the users of the premium version SpreadCharts can watch it in the app.

You should not miss it! Get access in the app or here on our website.

But that’s the long-term outlook. The situation is much more opaque in the short the medium term. In order to help you, we published two important threads on our Twitter last Sunday.

The first one was dedicated to VIX futures. The recent price action is clearly not bearish. That can lead to medium-term choppiness and more bear market rallies. Effectively, it would push out the events we talked about in the New Year’s outlook further away.

(1/n)

We got inquiries from two of our users about the recent breakdown on the $VIX.

Not the VIX index or the near futures, but on the more distant part of the curve (like VX4 on the chart).

This is a bullish development (for stocks) without any doubt.$SPX $SPY $UVXY $SVXY pic.twitter.com/MpaHHLQDI3

— SpreadCharts.com (@SpreadChartsCom) January 22, 2023

The second thread was dedicated to the price action in Bloomberg Commodity Index. It suggested a short-term bounce in the Dollar and a selloff in precious metals and stocks.

(1/n)

This is the most important chart right now.

Whether it breaks up or down from this consolidation will decide the path for markets in the short term.$DBC $DJP $SPX $SPY #DXY $GLD $SLV pic.twitter.com/AzlAtM0Bu2

— SpreadCharts.com (@SpreadChartsCom) January 22, 2023

Getting the markets right in every time frame is impossible. Especially when we are in a bear market and volatility is sometimes brutal.

The best strategy is to avoid short-term speculation and focus on the longer time horizon.

We will continue to do our best to help our premium users navigate these dangerous markets.