03-24-2020: Head Fake or the Real Deal?

In anticipation of the massive stimulus bill getting through Congress (despite the rather despicable actions of one party to put as much pork into the bill as possible that has nothing to do with the coronavirus... and since I am loathe to alienate half of my readers, I'll leave it up to you to decide which party should wear the "despicable" mantle), the market boomed higher today; the biggest gain in the Dow since 1931!


The odds are high that the bill will make it out of Congress tonight, probably giving the market the opportunity to shoot higher in the morning. So, I guess we should all breathe a sigh of relief that the worst is behind us and just as soon as we get control of this coronavirus, happy days will be here again and the market will rebound thousands and thousands of points higher. Right?


I am not so sure... In fact, my trend-based data all point to a continuation of this bear market and since the economy is at a full-stop (world-wide), this massive monetary insertion into the economy will not be an economic stimulus, but rather an economic ventilator. The money is designed to keep the economy alive; albeit, on life support. Is the money needed? Sure looks that way to me. Will it have a major impact on the economy getting back on its feet? Hard to see how that can happen. Will it help keep our economy alive? Yes, but the economy is now on a ventilator and in the critical care unit.


People have to be able to get out of their homes; to travel; to go to work; to buy things; to shop; to get excited about the future... and to NOT worry about contracting a deadly virus that is far from being contained.


Don't get me wrong... I am all for this bill and the help it will provide to small and large businesses and to individuals who are out of work. This is a good thing; an important thing; a necessary thing. But, we are fighting two wars: a viral pandemic and an economic tsunami that has brought the world's economy to a sudden stop; something that has never happened before in the entirety of modern history. This stimulus money will be great to keep the economy from total collapse. But, it will not put the economy back on its feet. And while we will win the pandemic war, winning that war will not mean that the war to revive the economy is won... not by a long-shot.


So, let's pray that the war against the pandemic is soon over. And, let's pray that our economy can get back on its feet soon thereafter. But, as much as it pains me to say this, the stimulus bill that will pass Congress at some point (maybe tonight), will not keep the downward spiral of the stock market from trending lower. The market is, indeed, giving investors a head-fake... I will be surprised if the turn-around in the market today is the real deal.


Today was a great day for the market, but not enough to change the downward slope of the market (not even close) trend. Tomorrow could be another great day, but it will take many of these kinds of day to turn the market from bearish to bullish and, unfortunately, I do not see the stimulus bill stopping the down-trend.


I began selling into this rally today in ULTRA-MAX. Tomorrow, I will be selling into the next leg of this rally. I kept 4 of our 5 strategies in cash today. I may put small percentages of inverse ETFs into all of our strategies tomorrow (more so for ULTRA-MAX).


Bottom-Line: I see nothing in the data to indicate that the market has bottomed. And, as always... I could be wrong. But, as long as the data are bearish, I am bearish... and, I am very bearish.


Be safe... stay away from crowds...