I have a pet peeve. OK, I have several, but today I want to discuss just one of them. It is this nonsense that unless or until we get to the S&P down 20% the folks in the media will not declare this a bear market.
I have no formal definition of a bear market. I have a concept and that concept is that when the majority of stocks are in downtrends and they have been for nearly 16 months, it's a bear market. I have stated before I think the majority of stocks have been in a downtrend since the first quarter of 2021 and therefore we have been in a bear market since then.
I do not know where this obsession of needing to wait for down 20% came from, but it's annoying. Because it's not as though anything magical happens at down 20%. I mean who is sitting around waiting, saying, OK, I won't sell until we get to a bear market? My gosh if you are doing that, please see me after class!
In the past week, we have yet another obsession where every single guest on television is asked: Are we closer to a bottom? Let's get one thing clear on this notion as well: There is no one who knows when we will be at the low. Oh some of us -- and, yes, I am very much in that group -- will call for a low, but the low?
And perhaps I have missed what exactly the media's definition of a bottom is. I can be sure it is different than mine. My definition is after bases are built, after there is enough support that has been tested and retested to make us feel comfortable that an entire group of stocks won't crack all over again. So, the answer to that question would be -- or should be -- ask me in a few months.
Now that I have finished that rant, let me note that breadth was positive on the day while the indexes faltered. Is this the start of a trend? I do not know. What I know is that individual stocks are responding to the oversold condition.
Keep in mind last year, while breadth was creeping ever lower, the indexes were held up by a handful of stocks. Now we have some stocks holding while the indexes are being pushed lower by the index moving stocks.
In the meantime let's talk about the US Dollar which has really come off the boil in the last few days and no one seems to be fussing over it. I don't think there is a big correlation to the S&P but take a look at the move in the buck since April (arrow on the chart.) That's when it took off. And that's when the S&P began this leg down.
Perhaps I am making much out of nothing but I find it interesting that on the way up, we saw lots of chatter about the strong dollar and so far none about the rollover. Let's see if it matters.
