January 31, 2022
Good morning,
From a short term perspective (days and weeks), the sell-off this month shares more characteristics with a correction than the beginning of a bear market. The technical indicators describe a rotational correction, not a new bear market. Correlations typically get very strong and run high in a bear market, and we’ve seen little of that this month. Oversold with pessimism at an extreme, the major indexes spent most of last week testing Monday’s intraday lows, possibly building a base to be followed by renewed rallying.
Did this correction end with Friday’s rally? One day does not a reversal make, but with just a little follow through this week, we may enter a period where we see how much of a wet blanket the removal of stimulus has on the bounce rally (last week’s note)
Warning: I’m going on a true vacation tomorrow through Friday – fingers crossed here and you all know the reason why.
Be well,
Mike