A case can be made that the major stock indexes have been in rally mode since late December 2018. That was the last time the S&P 500 index declined by 20.0%. At that time, the Federal Reserve also started to cut the fed funds rate back down to zero and began a massive $120 billion a month bond buying program. This was the catalyst for the huge bull market over the past 3 years. 

 Now we are in 2022, the Federal Reserve has vowed to start raising interest rates in March. They will also end their $120 billion a month bond buying program. There is a new administration in power that is very much against fossil fuel independence causing crude to trade over $90.00 a barrel. National and global inflation is soaring in many different areas such as food, energy and commodities. The central bank seems to be locked into a box. They really have no choice but to raise rates at least 3 or 4 times this year to try and curb inflation. In other words, the central bank put is gone for now.

 All bear phases and bear markets have sharp rallies. On January 24th, 2022 the S&P 500 Index traded as low as $4222.60 before rallying back to $4595.31 on February 2nd, 2022. That was a bear market rally and now the major indexes are starting to retest those January lows once again. This time it seems like the catalyst for the decline in the stock market is due to tensions between Russia and Ukraine. There is usually something that causes fear or greed in the market, this time it is obviously fear.  

There is really only one way to navigate this type of market environment and it is not easy. You can buy stocks at solid chart support levels, but do not overload yourself with too many positions at one time. Also, do not trade heavy share size as the odds of a stop out have increased with the elevated volatility. Traders must be very selective and pick the best technical levels that you can find. Traders can also sell short equities with bearish chart formations as well. Remember, there are two sides to the market, they are long and short. Again, if you selling stocks short it is imperative to make sure you have a solid technical chart pattern with a defined stop loss. Please understand that bear market bounces are extremely strong and powerful. Just look at the January 24th, 2022 bounce to see how strong and sharp they can be when they occur. The bottom line, we are currently in a very tough market environment at this time. So take it slow and use charts to select the best possible trades. As a trader we just want to create a solid risk/reward trade scenario and that will give us the best chance to profit overall.