We got to cover some important stuff and this is going to be the best explanation. I can come up with of why, even though recently i've been sounding a little bit bearish in terms of the overall market, the s p 500 in the short term, i'm feeling a little bit bullish and i want to add some interesting quotes and analytics and actually Numbers for all of you, especially for some of the people who, like more of the quantitative type reasoning out there, a study of secondary reactions in bear markets will reveal that the development of those movements is usually indicated by a series of minor, rallies and declines with Each rally generally carrying above the preceding one and declines terminating above immediate preceding lows, such a formation in the averages forecast a secondary advance, even though the primary trend is down. This is when i'm talking about a bear market rally, statistically, it's actually common to still have pretty brutal moves to the upside, even though you're in an overall downtrend reactions, whether in a bowler bear market nearly always consume less time and are more violent than our movements. In the direction the primary trend, it is not unusual for a three-week rally in a bear market to retrace 30 to 60 percent of a downward swing which may have taken many months to complete.

So basically, when starts to get volatile, it gets very, very crazy and obviously i'm not a fortune teller. I can't tell you what's about to go down in the market, but prepared with this knowledge. If we start to see some craziness, it gives us an idea of like it's, not the most insane thing to actually have a bear market rally that can have a sizable percentage. Move of the recent sell-off end.

If you want, you could look at the sell-off from january 5th, all the way to now in late may. I still think we're overall in a downward trend, but these moves to the upside they're tradeable and you can make a lot of money very, very quickly now to add on to that stanley druckenmiller. This is a guy that we talked about last week, actually also had some commentary on bear market rallies. It's always very difficult in a bear market stocks, don't trade with rhythm and you get these vicious rallies you get squeezed out of shorts.

That's exactly what it is! It is you have so much volatility, you have so much fomo in one direction or the other, and i think what happened really on friday, most of the day being extremely bearish. I think you had a lot of people who identified as bulls and they're like finally throwing in the towel they're like screw. It will be bears and then right away, i'm always on the mindset that the market's trying to screw the most amount of people possible. So i think all these people who are a little bit late to the bear game are about to get their asses handed to them and when they finally are done getting their asses handed to them, i think we're going to resume the move back to the downside.

I'm always in that mindset of how is the market going to screw the most amount of people and for the longest time everyone's like no we're not going down it's over it's over it's over. Why would you be embarrassed and look at that? We went down down down well now. I think it's changing a little bit where we're like, and i think some people are starting to see that sentiment and i think too many people switched really the team they're playing on and i think all those new bears are about to get screwed so to be Very clear about what i'm seeing, i think short term. We could be experiencing a bear market rally, something to the upside and then i think the overall bearish trend will resume and i'm not the only one.

According to the wall street journal and some other fancy people portfolio manager - i doubt he even owns one astronaut outfit, but that's besides the point. Stock market bottom remains elusive. Despite deepening decline, there are going to keep getting worse before they get better. Let's jump into why u.s stocks are in the midst of their longest sell-off in decades in terms of equities, this is the longest continuous sell-off since we've seen since i believe 1930, it's been like a fair amount of time.

Market cells have long stumped strategies trying to predict when they were close to being done. Some have concluded with bursts of panic selling others such as the ones lasting from 1973 to 1974 ground to an end after days of subdue trading volumes. Now, just from a little bit more of my quantitative, like research in the market that i used to do way way heavily, this is an elusive thing that many people have been trying to do. How do you predict a market bottom? Some people swear by one things.

Other people swear by another and some people just say: hey, i'm gon na throw out a dart at a dartboard and let's just see how it plays out most recently kevin o'leary, mr wonderful from shark tank. Most of you guys probably know him from that. He was saying his big sign of knowing when the market brought him in is a big player blows up a massive hedge fund, a massive institution, that's something that he looks for so. The s.

P. 500 is down 19 from its january 3rd record flirting with the 20 decline that would end the bull market and begin that began in march 2020. 20. That's the definition of a bear market.

This year's stock sell-off now in its fifth month, has already gone on for far longer than the typical belt pullback recurring. Without a recession, many people are skeptical that the central bank will be able to keep raising rates without tipping the economy into a recession. I'm one of those people a period when stocks have typically fallen 30 back to 1929. So that's just the average percentage selloff that we see during an economic recession.

The number in the sand is 30. Investors continue to have a hefty chunk of their portfolios in the stock market. Bank of america said that the month with the private clients, at average, of 63 of their portfolios dedicated to stocks far more than the 2008 financial crisis when they had just 39. So, according to bank of america, the way they're interpreting this is too many.

People are still in the market, not enough people have gotten burned yet they're. Looking for less people to be involved in the market, and also if you look in terms of volatility, we did not see the same volatility when we had the spike of the recession in the early 2000s, the financial crisis in 2008 2009 and the pandemic selloff. We are not yet at those volatility levels. Are we gon na get there? I don't know your guess is as good as mine, but there are some indications that there's still room to the downside in the overall markets, and this is applicable to equities and crypto, and i could argue this time around also bonds.

We still need to shake out the froth from the markets. Things are going to keep getting worse before they get better. So overall, i hold both of these thoughts. I think, in the very very short term, we're going to see some bullish action, but overall the medium term.

I think that trend is still to the downside now to really focus on something that we can actively use this week of why i'm leaning a little bit bullish. There are some things i want to get into. Last week we had some fed commentary and, if you've been listening to me at all, you know a lot of the market or my opinion on where the market is or isn't going is because of the fed. Recently, the fed has been extremely hawkish to battle inflation.

A side effect of that is, capital becomes more expensive and you see an exodus of money from the markets, i.e a sell-off, well, the fed everyone's kind of up to date, with what they're going to do. We know their quantitative tightening plan, that's very well laid out, and on top of it we know most likely. The next two fomc meetings are going to be a 50 bips rate increase. That's kind of settled in and they've even last week acknowledged that yeah eventually, when this quantitative tightening comes to an end, that they're gon na have to do some interest rate cuts, which would be pretty dovish and we'll most likely see the market pop.

So i think the whole fed situation everyone's kind of digested, what that is especially based on the commentary from last week. Now, from a technical perspective, i think it's as simple as hey the market is extremely oversold, and even though i do think the medium-term trend is still to the downside, there is a sense of a mean reversion type of a play as in hey it's too extreme. As in we've sold off too much, it's not the craziest thing to see a rubber band effect where you come back for a brief period of time. Another reason on top of it look at the date we are in late may.

Not only are we in late may we're coming into quadruple witching, which is in the middle of june, so we're looking at some serious monthly rebalancing from the big players. Think of the massive massive players to the point that jp morgan last week put out a study that they believe anywhere from 34 to 56 billion dollars in mutual funds, will be rebalanced this week next week, i.e very very soon, which could lead to a massive redeployment Of capital back into the markets, because there's already been such a big percentage decline once again, quadruple witching, we're coming to the end of the month mutual funds, massive rebalancing, i.e, potentially money coming back in another reason, so that's another one for the flows, but i want To get into the 15 minutes of what happened the 15-minute chart here friday into close, we saw this massive push after we've been selling off and selling off and selling off. Why? I think this is so so incredibly important is we've been seeing it on unusual whales forever of just the options market has been dominated by the bears. Another way to put that is that the options market has a lot of, puts.

Don't forget that the options market is a single dealer market in the equities market, yeah you're, most likely trading against market makers, but you theoretically could be trading against someone else in the options world. It's not like that. It's a single dealer market, you're exclusively playing against the market makers because there have been so many puts bought. That means that these single dealers, these market makers, have been selling a lot of puts when they sell, puts and other people whoever it is me, you institutions, it doesn't really matter when those people are buying puts which recently, over the past two weeks, we've seen its Dominance around 60 to 65 percent of all options.

That means that a lot of people are buying push which means they're selling a lot of puts, which means they need to hedge. How do you, hedge? A put you sell stock? Well, because of this pop in friday, i think there's a lot of puts that were not going to be rolled, they weren't rolled, i don't think they're going to be rolled and because they're not going to be rolled. That means that these big players, the big market makers for options no longer have to have that head as in they no longer have to have that short, as in they're going to be cutting a short. So all of a sudden, i see various things going on.

I see people digesting what in the world is going on with the fed jp morgan's, predicting a big rebalancing, potentially billions and billions of dollars back into the market in terms of gamma in the world of options, i'm seeing it where there could be a massive hedge Position cut, and this particular hedge is a short which means cutting is short, so there's a couple things coming all together right now that i think we might might might might i don't know not a definitely not a financial advisor, definitely not a fortune teller, but i Think we might actually be seeing what's referred to as a bear market rally. This is all my reasoning. Maybe i'm right, maybe i'm wrong, but it's one of these things that i alluded to before that it's just the overall argument of sentiment. I think the market loves to screw over as many people as possible and now that we've gone extremely bearish.

I think all these late bears are about to get screwed. Once again. This is a very short term prediction and i'm going to let you know all my personal trades, whether in the options market, the futures market, all that stuff. But i wanted to do my best to articulate what i see going on in the market right now, because i think it's actually kind of a crazy awesome opportunity, but clearly you're going to be knowing all my trades as they do occur.