The Bear Case For Stocks

JC Parets
December 6, 2022

Focusing our attention on buying stocks over the past 5-6 months has paid very well. This is especially true in the stocks that have been showing the most relative strength this year.

The laggards remain laggards. The losers are mostly still losers.

The breadth improvement, however, remains in place.

Rotation overseas continues to broaden.

It's gotten harder and harder to make money from the short side since this Summer.

Last night was our Live Monthly Charts Strategy Session. We made the bear case. We discussed the bull case. And I walked through my favorite trades to profit from the current environment - both longs and shorts.

Premium Members can watch the replay here and download the 175 charts.

One of the questions I have is regarding the bond market.

We know that bonds are likely to have a major impact on the stock market. So with rates across the curve struggling to maintain their recent highs, what is happening underneath the surface?

Would it make sense for Inflation-Protected Treasuries to outperform Nominal Yielding Treasuries if rates are above to fall apart?

And if rates do fall apart, how would stocks react to that?

Why would rates be collapsing?

What does the bond market know that stocks aren't pricing in yet?

The stock market hates bond market volatility - in BOTH directions.

For me, the bull case for stocks includes a stable bond market. If rates are just hanging out up here for the next few months/quarters I think stocks are likely doing very well in that environment.

A spike in rates from here or a severe decline would likely lead to more stock market volatility.

In addition to what's going on in the US Dollar, I think the bond market is likely to have a major impact on the next direction for equities.

We discussed it all on last night's Live Conference Call.

Premium Members make sure you catch that here.

Give it a watch and then let me know what you think!

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