Worries that pummeled stocks on Monday really are very amplified issues we're all well aware of, including China's draconian lock-down measures, and just a couple intransigent hawkish comments from Fed-heads.

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Arguably you really have protests expanding in China that are most intense reactions by the Chinese public since the pro-democracy movement ended as the authorities massacred so many at Tienanmen Square.

Equity markets normally don't bottom before a 'recession' starts. The catch with grappling with this common perception, is that we already went through a lot, masked by the inflation that was partially influenced by excess stimulus at the same time that was essential, and while the Fed stayed low for too long.

I think we all grasp this situation, but ponder whether the Fed does. Bullard's comments imply the Fed 'really' has control over the inflation pace. It doesn't, and he should know that (probably does but won't say so as of yet anyway). I also note that an inverted Yield Curve doesn't always promise a recession of sustained proportion, but other factors might make this into a double-dip.

There are so many variables, but inflation and the Fed is not the heart of soul of this... maybe it's how hard President Xi of China puts his food down on the 'sole' of Chinese grumpiness demanding more freedom, that matters.

We of course have a recession in Housing, we have a predictable soft spot in Oil (seasonal and lower Chinese demand for now), plus Venezuela coming on line after years of repression (that may persist, but supposedly 'freedom' was part of negotiations that led to a Caracas Agreement for Chevron operations).

Oil prices are 'not' going much lower, the Dollar 'is' firm, and the VIX lift on the abbreviated Friday was suspicious, though we doubted in on a holiday. We'll see if there's still capacity for another turnaround, so flexibility remains better than any doctrinaire bullish or bearish view for the days immediately ahead. It's not just consistent or not with bottoming processes (Sept. / October was as outlined an erratic complex bottom), and so many stocks are so low, we're not going to let this kind of expected post-holiday respite confound anything. I expect Chairman Powell will aggravate a few traders too in a couple days.

I know that a number of fund managers speak of 'yearend rally then 2013 big drop'. Perhaps. But for now I lean a bit more to defensive early December and a relief rally in the first part of next year. But generally remains a tough time. If one needs a microcosm of it all, watch Apple (AAPL). It's clearly in the cross-hairs as relates to China, and already expected lower iPhone demand before China's latest mis-governance errors that has triggered wide-ranging chaos. (The last time we suggested buying Apple was split-adjusted 57, it's not going that low, but all through this year I've been disinterested in buying any Apple, even as they increased -although not spectacularly- their service-oriented revenue.)

S&P based on liquidity trends and the barely-started Balance Sheet trimming, has a presumed significant downside potential but remember much already occurred before our forecast rebound from earlier this Fall. It's conceivable we get multiple swings without resolution for the Senior Index in a dramatic way.

Besides China's repression being more than incremental for their populace (if Xi doesn't immediately soften his stance), it's becoming significant 'again' for the 'supply chain' issues that were largely resolved (shortage become surplus to a large extent), but now most things still 'Made in China' are challenged as production is strained at best. Vietnam and India try, but can't pick-up all the slack (especially from big players like Apple), so we'll see. Some economists are saying the U.S./China relationship is going from bad-to-worse, but if you ask actual Chinese business people, they'd like to see just the opposite occur.

Stocks are not behaving uniformly, or at least should not. 

Bottom-line:

S&P deflected just shy (but in the neighborhood) of recognized key resistance and everybody knows that. It probably means the short-side is yet again crowded. So you could get a washout and rebound/turnaround, but the dive is deep enough to make overcoming the highs problematic at least. I am not particularly optimistic about that and remain defensive with a caveat.

That caveat is the 'active' approach, the cross-currents of tax-selling and 2023 positioning, which promised continued or resumed turmoil even without things deteriorating geopolitically as they have. Imagine if in the midst of this, a new round of 'secret' negotiations between Ukraine and Russia yielded fruit? Not on the menu right now, but you never know and flexibility remains a key even as the defensive tone of December trading ahead 'in-general' is retained. It's a challenge but a purpose of December is positioning for 2023 without certainty.

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Market Briefing For Monday, Nov. 28
Market Briefing For Wednesday, Nov. 23
Market Briefing For Tuesday, Nov. 22