"Between mid-February and early April, the SPX rocketed 13.3% higher in just 7 weeks! That made for one of the biggest intra-quarter recoveries the US stock markets have ever witnessed. Working with Dow 30 data since its history extends back much farther than the S&P 500’s, researchers at a company called My401kPro.com did a fascinating study on intra-quarter rebounds. They started way back in 1900.
It turned out Q1’16 was only the fourth quarter since 1900, out of 465 calendar quarters, where the US stock markets finished positive after falling 10%+ within a quarter. So the rally we saw in the second half of Q1’16 was extreme and exceptional. This study dug deeper, expanding intra-quarter rebounds to recovering 8%+ after a 10%+ intra-quarter selloff. That happened 26 other times since 1900 in the Dow 30.
Here’s the kicker. It turns out that fully 24 of those 26 massive intra-quarter rebounds happened within secular bear markets! There are near-certain odds what we just witnessed was a bear-market rally. The reasons a new stock bear is awakening are legion, and the technical profile of that surge just happened to perfectly match that of bear-market rallies. It erupted sharply in fear off major lows fueled by short covering.
But as that short covering petered out, the pace of the surge moderated in anemic low-volume up days. There was little buy-side conviction, with serious asymmetry between the high volume of the preceding major selloff and fading volume of the subsequent sharp rally. It perfectly executed the mission of bear-market rallies, to eradicate the excessive fear at recent selloff lows and rekindle widespread complacency.
Even at this bear-market rally’s apex last Friday, the SPX was still seeing a long series of lower highs since its all-time record peak late last May. The stock markets have been rolling over on balance for almost an entire year now, their lower highs and lower lows forming a powerful technical downtrend. Such developments simply aren’t seen in bull markets, the Fed-distorted stock-market cycles have finally turned."
Mi voto es No positivo.
