There was a bounce this week. As I've previously said, markets were getting tactically oversold, and I expected a tactical bounce after eight consecutive down weeks. Regardless of the positive price action today there are still plenty of signs that we are late in the cycle. Hence, you can probably set you watch by the high likelihood that there is a wave of downgrades from analysts coming on all things cyclical. This would win the day over bullish hopes and the market may have to deal with these downgrades and negative pre-announcement in the lull between earnings seasons.

The market is still facing several risks and an approaching downturn in earnings revisions. When earnings revisions get to the Southern Hemisphere of my model (meaning the average stock is having its earnings projections cut downward), historically there has been 10% to 15% downside remaining. It could be different this time, but I think the below risks I’ve been highlighting in my work have not had their final word yet with regard to their effect on markets.

Russia/Ukraine conflict—no end in sightElevated energy prices and their negative impacts on both inflation and consumer demandRising interest ratesTightening monetary policyGrowth slowdown fears increasing, leading to a 1-3 month duration of est...

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