Desperate Bear Market Rally

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As is typical, equities like to attempt a final desperate move up before a plunge. Historically, what this usually looks like is a quick 8-10% move from the previous low. I contend we are in the very late stage of such a move from the recent /ES 3639 low, sitting currently at about /es 3970. There is a gap above in the 3980-4020 area, and the market would love to close that in order to maximize pain for bulls and bears. I am so far up in my positions, however, that I am willing to take on more risk and cannot add new short positions fast enough both yesterday and this morning. In other words, we may go a bit higher which would completely unsurprising (like the entirety of this rally), and I don’t care. The risk/reward is still in favor of significant downside. The notion this time around fueling the rally is that the Fed will pivot sooner rather than later due to recession risks outweighing inflation. I disagree with this completely and believe the Fed is boxed in, especially because they have taken a measured approach to rate hikes and its balance sheet unwind.

I think this will be a story I tell my grandkids about, God willing. Until then, happy hunting (trading).