TLDR:
The rally is too narrow. It moved up too fast. Stocks are not paying attention to macro fundamentals. Stocks have disconnected from micro fundamentals. There are just so many reasons why a rally should not have happened – and yet here we are. On the verge of a … wait for it … bull market.
A bull market is an arbitrarily defined 20% rise in a benchmark index. There have been many, many 20% moves since 1929 and there is little reason to endow the 20% with a particularly special meaning. But there is some evidence that after a rise of that magnitude, the market won’t revisit its lows.
So maybe 20% is really the amount of “healing” investor psyche needs before they can contemplate getting back into stocks?
So, is this it? Has the market low been put in? The lowest point of this cycle was Oct. 12 at 3,577.03. As John Authers points out in his always excellent blog, at just shy of 200 days, this would make it one of the shorter bear markets in a – pretty long history of the S&P 500.
More to the point, he writes, at 236 days and counting since that low it would be very, very unusual for the stock market to go back to its low after levitating above it this long.
The market broke a 12-month streak of negative year-over-year returns in April. The market has been up a year after breaking the streak every time that’s happened.
The bulls can breathe a sigh of relief (if they’re long, otherwise it’s a major FOMO moment).
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Earnings Highlight: Casey’s General Stores reports tomorrow
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General Interest: The fusion race continues
For the good part of the last 80 years, governments have been the sole runners in the race to fusion.
For decades, technology was not quite there yet but governments plowed ahead, pouring billions in research to achieve the ultimate goal of free clean energy. And now, finally, that investment seems to be paying off.
Dozens of startups, armed with billions of VC dollars, are building “on the shoulders of giants“ and racing to deliver, finally, the first commercially viable fusion solution.
Read the full story here on notboring.co.
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Originally Posted June 6, 2023 – Why stocks won’t retest the lows
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