I continue to agonize over what's next. It occurred to me I could simply step aside altogether, but you'd soon find I'm a lot less interesting commentator on the markets if I'm not actually in them. In any case, I went back to the early 1930s to see how it behaved, and I saw many instances during that plunge where I'm sure it would have been easy to make a case for a big move upward:
The problem, though, is that if you look at the recent market (especially with a line graph), there is nothing – and I mean nothing -to equal the speed of the plunge we've seen. Not 2000-2002. Not 1987. Not 1973-1974. Not even the Great Depression. Nothing. I can simply find no other instance of anything like it.
So I keep leaning toward the idea that things are so ungodly stretched to the downside and a robust bear market rally is in the cards. It's still a real dilemma, since, taken individually, my short positions are very attractive. But very few shorts could do well in the face of a 200 point S&P rally, which I think may be in the cards.
