Bearishness followed by solid breadth = Best Fed day since 2022 Array ( [cookie] => d6a83f-48531a-4e1aca-983a4e-799e38 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 158462 [user_id] => [reason] => [method] => ) 1 and can accesss
Markets have begun the process of bottoming out and have carved out the first meaningful move off the lows since late last week on above-average breadth data. Despite FOMC lowering its Growth forecast and raising inflation data, Equities turned in their best “Fed Day” performance since 2022. Moreover, the combination of sentiment data turning fearful, followed by an above-average surge off last week’s lows, looks bullish for Equities in the months ahead. Overall, it looks right to position long with movement above 5703 on a close, leading to a meaningful rally back to new all-time highs. The downside should be limited to roughly 3%, while the upside back to new all-time highs should get underway to carry SPX up more than 9% initially.
Three factors looked most important this past week as to why Equities might be bottoming:
- Severe bearishness looked to have turned more capitulatory, with the Equity put/call ratio having neared 1.0 while VIX showed evidence of term structure inversion. Bank of America’s recent Global Portfolio Managers report illustrates some of the more negative retracements from US Equities in allocation of all time.
- Breadth gauges such as McClellan’s Summation index and SPX “Percentage stocks above 10 and 50-day moving average(m.a.)” failed to break down under January lows and have held up remarkably well despite the damage in SPX and QQQ.
- Advance/Decline surge off the lows on back-to-back days is a welcome development following the recent quick 10-15% decline in SPX and QQQ off recent all-time highs from February.


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