I have been bearish for most 2022 because why would a person with normal IQ not be?
We have had highest inflation and one of the most financial tightening in decades. Valuation was and is still high. High bonds yields. Never ending Russia-Ukraine war. No signs of Fed pivot (rate cuts) in the next 9-12 months and Fed has no good history of pulling a soft landing. Everybody, including many smart CEOs, are warning about coming recession
On the positive sides, inflation seems to be going down, no signs cracks in labor market, consumers are still spending (look at Costco December sales report), Fed is almost done with rates hikes. And please do not tell me we are in recession with an unemployment rate back to the historic low of 3.5%.
As of today closing, S&P 500 and Dow are down ~17% & ~7% from peak, respectively. This is not even bear market territory. Since 1950, the average decline for the S&P 500 during a recession is about 29%.
That's being said, market still want to rally on any news (good or bad). Today and terrible September CPI data are examples. I do not see any upcoming bad catalysts except big earnings miss at end of January. Next CPI will likely show continuation of decline in inflation and possible market rally.
I have been waiting for S&P 500 to hit 3200-3400 to deploy more cash, but after today, I started to doubt that it would even happen with this market resiliency.
No matter whether you are a bear or bull, you should admit that this stock market has been resilient.
Disclaimer: I have been DCA'ing since September. I am long index funds and multiple stocks. No shorts. ~60% cash. Still bearish.
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