This market rally, the one going on today, is nothing more than a bull trap.
I hate to burst that bubble, but look at what the market is rallying on.
The Bank of England intervening in the bond market after a historic slide.
This is not global quantitative easing, which will be needed to solidify a bottom.
Treasury Secretary, and former Fed Chair, Janet Yellen just said yesterday that financial markets were functioning well.
No issues whatsoever despite volatile currency markets, bond markets and stock markets. All part of the plan, people.
It’s a nice pop and could run for a few days. Afterall, bear markets are known for violent rallies.
But the bottom is not in folks.
It’s just not.
Here’s What You Need to Know
This bounce comes the day after the S&P 500 hit a new low for the year. Both, in terms of intra-day price move and closing low.
Investors are trying to buy the dip, but I believe it will be short lived.
As much as I want to ride the next big move higher, this one doesn’t have much strength behind it. Market attempts to move higher this week have been followed by more selling pressure.
I laid it all out in my Bear Market Guide to Thrive Inflation Edition report. There are three simple things to watch for when the bottom is in. I even set it up in a simple checklist.
And we are not there.
If you are making money on this rally, congrats.
But it’s time to take profits and look for a pullback.
As soon as investors realize the Fed is sticking to their plan and executing on what they have said all along, this market will reverse rapidly.
You’ll have a chance to buy lower, except maybe Biogen (Nasdaq: BIIB), that stock ripped today on promising data from Alzheimer’s drug trial. But I still wouldn’t chase it.
I’m watching a few key levels, may play some moves on this rally, but extremely short-term, in-and-out, is the only way to play it.
Overall, I’m still bearish.
CBOE Volatility Index is above 30, elevated fear in market. If it gets back below it, I’ll trade some long positions.
But not yet.
Today, I personally added more bearish trades on this rally.
Take what the market gives you…
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE