Just to remind myself and others: a RECESSION does not always produce a BEAR MARKET. In fact, a shallow recession can be VERY BULLISH if you do not buy too early or too late..
yeah, timing is everything. Scaling into LONGS from about midway in a recession can be very profitable. This RECESSION TALK now is almost irrelevant as far as trading the markets on a ST basis.
Bulls Versus Economic Data That Says Fed Is Not Done
",,,,However, on Friday, the market cracked that initial support at the 20-DMA as the MACD signal deepened. While the market did rally into Friday’s close, suggesting the bullish bias remains, this is the first sign of a potential retest of the multiple support levels clustered around the 3950-4000. If the market can hold those levels, such will be an opportunity to increase equity exposure. A failure of that support will suggest a deeper correction is at work.
As we will discuss in today’s newsletter, the economic data has supported the bullish case of a “no landing” scenario. That scenario assumes the economy avoids a recession entirely, allowing earnings to start growing again in the second half of the year. That somewhat optimistic scenario is heavily at odds with a Federal Reserve focused on slowing inflation which is only achieved by reducing economic demand through tighter monetary policy.
No Recession Bet Seems Unlikely
"...However, on Friday, the market cracked that initial support at the 20-DMA as the MACD signal deepened. While the market did rally into Friday’s close, suggesting the bullish bias remains, this is the first sign of a potential retest of the multiple support levels clustered around the 3950-4000. If the market can hold those levels, such will be an opportunity to increase equity exposure. A failure of that support will suggest a deeper correction is at work.
,,,While markets are rallying short-term, history suggests that equities will not be able to fend off higher rates indefinitely. Such is particularly the case with the 2-year Treasury rate, which correlates with changes to Fed policy. It also suggests that interest servicing on consumer debt will become more problematic over the next several quarters as individuals run out of savings....."
