As much fun as I’ve been having in 2022, I’m reluctant to dare mention bullish prospects, but I’ll choke back the tears and offer the possibility that the market – – – for reasons I cannot possibly fathom – – – be in a position for a hearty counter-trend rally. I will be clear that there isn’t a doubt in my mind this is an honest-to-God, multi-year bear market, but bounces come with the territory, so we have to bear with them, as it were.
What has me the most worried are the Fibonacci retracements. I see them on IWM, SPY, and QQQ, and we’ll use that third one as an example for our purposes. Simply stated, we have been hammering out support in recent days and are poised for a rally approaching 10%.
Here is the longer-term picture. The position of the anchor points for these retracements – – – well, the lower one, at least – – is rather subjective, so it isn’t rock-solid certain that these lines are properly placed. But they seem plausible, and if they are, it certainly suggests the hard tumble from March 29 to May 20 may be “it” for now. Which, of course, would suck, because falling markets are a blast.
I have taken this caution to heart and bumped up my cash position to 13.3%. My average days-to-expiration for my options is 123 days (4 solid months), so obviously I’ve got gobs of time, but honestly, I gotta say, dealing with these fight-backs is a huge drag and an utter bore. But it could happen.
