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Expect More Stock Market Pain Because It's Coming

Today feels bad for bulls but it is not even a down payment on what's coming.
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S&P 500 Index chart courtesy of StockCharts.Com, annotations by Mish

S&P 500 Index chart courtesy of StockCharts.Com, annotations by Mish

There was significant carnage in individual issues today. Yet, a step back to a monthly chart shows the decline in 2022 does not yet register. 

Bear Market Action

In bear markets, support levels do not hold. There is almost no chance the 4200 level on the S&P 500 holds. 

Although bear market bounces can happen at any time. the next technical support level is near 3200 or so. I would expect a bounce there for technical reasons, but there is no fundamental or technical reason to expect a bottom there. 

Indeed, I expect to be at that level before a recession even hits. 2400 might hold but I doubt. Taking back all the gains to 2016 or 2014 is a strong possibility. 

That would be a decline to the 1800 to 2000 level. Curiously, that level would not make stocks a scorching major bear market PE buy, but rather something reasonably priced.

Tweet of the Day

Lots of Pain Left 

"In the last 2½ hours, volatility players have started paying attention, w/ 3-mth $VIX curve dropping from a blissful +3.1 to a "nervous giggling" +1.5. For reference, get-me-out panic is below -5, so still lots of pain left to get there."

Those citing bull-bear survey ratios please pay attention. Those numbers reflect what people are doing, not what they are saying.

How Many Hikes Coming?

I think Bianco is wrong, but I easily could be. And what happens to equities if he is right?

Soft Landing?

I suggest roughly a 2% chance. 

Danielle DiMartino Booth on Art Cashin

The final hour was a rout.

Theme Trading 

In the "Oops" Department 

Scroll to Continue


Hoot of the Day

Cramer warns of a crash landing. That's my hoot of the day. 

David Hunter is Still Looking Melt-Up

That Tweet was last year. He is still looking for the melt-up. "Watch and learn" is a Hunter phrase. 

More on Rate Hikes

Worst Case Scenario

What If?

  1. Assume the call is correct? What If?
  2. Assume the call is incorrect? What If?

In case #1 inflation will still be a problem.

In case #2 how deep will the recession be?

So, forget about a soft landing.

The correct question is What's the Shape of the Hard Landing?

And where will stocks be?

This post originated at MishTalk.Com.

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