Stocks rallied sharply Monday and Tuesday and a number of Real Money subscribers emailed me asking whether it was time to move back into stocks.
The question is understandable as I have been recommending a defensive stance since back in December 2021.
I penned a longer piece on Monday outlining many of the tools that technical analysts look for in trying to time a market bottom. Despite a two-day burst of buying perhaps pinned on hopes of a shift (i.e. pivot) by the Fed, I am not moved to declare that the bear market is over.
If traders felt that Monday was the start of something bullish and durable, I doubt that the market would trade off in the last 90 minutes of trading on Monday. A real low would have seen prices close on the high of the day.
Prices were oversold and prone to a rebound. In this daily Japanese candlestick chart of the S&P 500, below, we can see that the candles do not show us a bottom-reversal pattern. Trading volume did not surge strongly and the On-Balance-Volume (OBV) line is still pointed down.
Bottom-line strategy: I could be dead wrong, but I anticipate a better buying opportunity later in the fourth quarter.
Get an email alert each time I write an article for Real Money. Click the “+Follow” next to my byline to this article.
Source: https://realmoney.thestreet.com/markets/this-bear-market-is-probably-not-over-16104305?puc=yahoo&cm_ven=YAHOO&yptr=yahoo