Frustration dominates the never-ending debates about how low is low for a market dominated by capitalization-weighted 'influencers' in the S&P or NDX, while an additionally perplexing debate now arises about how enduring reflex rebounds can be.

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To say that no amount of debate settles the questions is reasonable, because of the variables geopolitically, monetarily, and even from a health standpoint. I do believe there's a reasonable assessment to be made from this however.

Let me focus on this week, I suggested a probability of some sort of rebound, whether it's a short-squeeze or not, coming from the depths of despair which dominated going into Monday. And while it was tricky given the 'flash crash' in London nobody seems to have noticed, we did get the move and it extended slightly into Tuesday. Then we went on hold pending the probably rate hike on Wednesday, which is sort of discounted if they do for-instance 50 basis points.

Now, if we falter there's no change in our 'measure' to ~3800 S&P, which may or may not be reached, or exceeded if there's an overrun such as to ~3400. In a full-out panic, you tend to get overruns, but we already had some panic on the downside. Also we had overrun on the upside last year to mask selling on almost all stocks outside of the mega-cap 'Grand Dames' with buybacks etc.

Now, besides the variable we all know about (including whether Putin instead of more war, might decide to annex the Donbas as part of Russia not a facade of independent 'republics', and then proclaim the 'special operation over', as opposed to the 'total mobilization' media talks of, which Russian people aren't enthused about at all, and the Kremlin must realize that by now, but we'll see), aside all this there is a technical aspect to this market.

Asymmetric risk may be to the upside, but you don't load the boat for that. In fact what you can do is what we suggested in panic of recent days, nibbling in speculative stocks, or even 'call' options (if one can find low premiums with a bit of time) for reduced risk (because with so many stocks down it makes less sense to write or sell options, and more to have bought under duress), and if it doesn't work out then one has reduced exposure although zero option value.

Here's the rub:

While this could or should be a 'bear market rally' that was also the case often in the past, and along the way the fundamental backdrop quite surprisingly improved, and one discovers it was a more significant low point. It thus leaves open the prospect both for 'recession', sidestepping, war ending, famine avoided, oil prices ebbing, China opening up, supply lines improving or so on. If all that happens the surprise will be more than a rebound. Big 'if'.

In-sum: 

Today is mostly anticipation and holding ahead of the FOMC. Even 'if' you get a sober rather than draconian Chairman Powell 'news conference', it's really more dependent on what happens in the world, than what he says.

We'd be pleased if Powell acknowledges U.S. inflation as largely 'supply' not 'demand' based, beyond that pre-war / pre-China/COVID shutdown influences. If the variables mentioned resolved optimistically, the Fed will need to do less work, as not only would they not be effective anyway without throttling the US economy, but the market will have done some of the work for them.