EarningsBeats.com Digest for February 25, 2022
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So Has The Bear Market Run Its Course?
That's the question that's going around now after Wall Street had a masterpiece finish after a garbage start. Futures on Thursday were in the tank. The Dow Jones was set to open down more than 800 points, while the NASDAQ futures were down more than 400. Russia had invaded Ukraine and, with the Volatility Index ($VIX) already closing in
the 30s on Wednesday, we were set up for one of the biggest declines in a long, long time. But then something strange happened. The 10-year treasury yield ($TNX), which has been rising consistently in recent months, dropped 12 basis points at the open as crude oil prices ($WTIC) surged. That set the stage for HUGE buying interest in growth stocks as higher rates had crushed valuations in that asset class. We saw one of the biggest intraday market reversals in history by
the close. So was that it? The bears are finished? It's certainly one possibility, but history tells us to remain very cautious. High volatility (VIX) means insane market behavior and we saw it to both the upside and downside on Thursday. Before you grow overly bullish, here's a look at the 1990 cyclical bear market and how it unfolded:
After impulsive selling rattled Wall Street in August and September 1990, we saw very short-lived, rip-roaring rallies that did not last. I'm not saying yesterday's rally won't last. I'm just pointing out the possibility. I do not believe the issues that we had to begin the year will be erased by one day's bullish action. I would expect a short-term follow through today as many cyclical bear market rallies have lasted multiple days before
the selling takes over again. Please be careful out there.
I will be sending a "Special Report" to our EB members within an hour or so, detailing all of the cyclical bear markets since 1950 so everyone can better understand the insane market behavior that typically takes place during downtrends with extreme volatility. We're most definitely NOT out of the woods yet, so please be prepared for further crazy volatility - in other directions. If you'd like to read today's Special Report, we'd love to
have you sign up for a free 30-day free trial.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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