Market Lab Report - When will the bear market end?

by Dr. Chris Kacher

Despair not...

Human beings are incredibly inventive which is why all crises situations get dealt with... eventually (and some pending) as the long term stock market of the Dow Jones Industrials shows. When all seems lost, the market finds a low and starts higher once again. The pain point needs to become enough of an issue then expedient action is taken as many minds converge on the problem.

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As the current bear market drags on, our membership continues to grow despite market conditions because we have successfully guided members to safe harbor by way of seeing the headwinds as early as late 2021. Since then, we have provided actionable trades on both the long and short side, though today's market has been one of the swing trading type. Any sustainable uptrends have not materialized as is typical of bear markets.

Often, the best course of action is to stay safely on the sidelines. Cash is king in bear markets. But dont get left behind once the new bull begins. Sadly, some investors leave the markets only to get left behind. New bulls can begin on a dime even when all seems lost. This happened in early 2009 and in March-2020. As always, we stand ever watchful on a real-time basis to let members know of any such material changes in the markets. The odds of a black swan that would spur the Fed to print trillions once again are greater than ever due to the interconnectedness of the second order effects of various key events such as COVID, uneconomic green energy mandates, uneconomic ESG (environment, social, governance) policies, high inflation, record debt, and the tightening of the money supply, among other factors.

Until then, patience is key if one chooses to sit on the sidelines, awaiting a potential bottom, or is sitting in the Market Direction Model's signal which is riding the bumpy downtrend, dead bat bounces and all.

Recession guaranteed?

In 55 years, the level of Chicago PMI reported on Wednesday Nov 30 has always resulted in a recession. The Dec-2015 reading of 48.2% shown below is correct. One other publication clocked it at 42% leading the author to the wrong conclusions.


That said, markets are forward looking by several months so expect a major bottom before the next recession in the U.S. begins. Recession has already begun in other major countries such as Germany. A multi-century chart of the world shows that over the centuries, countries were still substantially connected so when recession began in one major area, it spread to all the other areas of the globe. Certainly in today's world, recession will spread to other major countries sometime in 2023. So a major low is likely sooner than people think as the next black swan hits or Powell cries uncle by the time the Fed hikes rates by a second 50 bps in February 2023, bringing the FFR to 475-500.