Update

Since February 7, six trading days ago, during the NYSE-only session, the S&P 500 has reversed at least 1% TEN times (four were 2%).

We started this period at SPX 4106. As I write, it is 4107.

Weeee!!!! pic.twitter.com/eBDxC6iSfR

— Jim Bianco biancoresearch.eth (@biancoresearch) February 15, 2023

I have to admit it: I have no clue what is going on. The market has essentially been chopping around for the last two weeks as you can see in the tweet above by Jim Bianco.

Breadth thrust, breadth recovery, & nascent price momentum suggest that October 2022 was a 4-year-cycle bottom. pic.twitter.com/iWt7p6WRPa

— Mark Ungewitter (@mark_ungewitter) February 13, 2023

A bear market rally starts by squeezing out shorts

It extends through some narrative that seems to validate price action (2001: worst is behind; 2023: soft landing)

In the end though, to morph into a new bull market it needs fundamentals and/or the Fed

You have neither in 2023

— Alf (@MacroAlf) February 5, 2023

From a narrative standpoint, bulls and bears each seem to be digging in their heels. The bulls are convinced the price action proves a new bull market began last October. The bears are convinced this is just another bear market rally unsupported by the fundamentals. I wrote about this disagreement a couple of weeks ago in “The Technicals Vs The Fundamentals” (Feb 3).

(Click on image to enlarge)

(Click on image to enlarge)

Some stocks – like Airbnb (ABNB) and Palantir (PLTR) – have rocketed higher after earnings this week, while others – like Shopify (SHOP) – have gotten hit.

Under these circumstances, there is enormous pressure on bears to capitulate to the price action. There is a fine line between having conviction and being stubborn. As for me, when I’m unsure about what to do, I do nothing. That is, I continue to gather and assimilate information in an effort to make sense of things.

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