Anatomy Of The Bounce, TLT Bear Market, Fed This Afternoon

First, by using the term “bounce” to describe the rally we’ve seen over the previous eight sessions, I’m not prejudging the issue of whether this is a bounce in a new bear market or a recovery from a correction in an ongoing bull market. As I’ve stated before, nobody knows which it is, only the market will tell us over time.

Bull, Bear, Stock, Market, Business

That said, I want to dig down into the action since Friday March 5 at 8:30am PST when the market found a bottom and has been rally ferociously since. The S&P (SPY) found a bottom on Friday March 5 at 8:30am at 3,730 rallying as high as 3,980 yesterday (Tuesday March 16) morning at 8:00am PST – +6.7% to new ATHs.

This rally has been led by Growth over Value starting on Tuesday March 9, reversing a budding trend of Value’s outperformance versus Growth. The S&P Growth ETF (IVW) is +5.7% since last Tuesday (March 9) versus +1.76% for the S&P Value ETF (IVE). Again: many have questioned whether this is simply a countertrend move or mean reversion in Growth versus Value or the resumption of leadership by Growth and again: nobody knows, the market will tell us.

However, the budding bounce took a break yesterday as the indexes found their highs for the day at 8am PST, selling off the remaining five hours of the session. The NASDAQ (QQQ) lost 150 points the last 5 hours.

Also interesting is that Value outperformed Growth substantially during that 5 hour selloff with the S&P Value ETF (IVE) up about 20 basis points during that period while the S&P Growth ETF (IVW) was off about 90 basis points. Does that then mean that yesterday was the end of a countertrend move in a longer term trend toward Value outperforming Growth? Again: it’s worth noting but by no means definitive in its meaning.

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