For years we have relied upon the Ned Davis Research definition of bear and bull markets. An official bear market requires a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days. Reversals of 30% in the Value Line Geometric Index also qualify. The drop is measured from peak to trough and both price and time criteria must be met. At today’s close it has been 160 calendar days since DJIA’s peak on January 4, DJIA is down 17.1% and at a new closing low which meets the parameters.
Inflation is stubbornly remaining at multi-decade highs, the Fed is tightening, sentiment is bearish, support levels are not holding, supply chain disruptions persist, there is conflict in Europe and energy prices are at record highs for consumers. Continue to be patient as the Weak Spot of the four-year-cycle will eventually give way to the Sweet Spot, likely sometime later in Q3 or in early Q4. Even with inflation at multi-decade highs, cash is likely the least dangerous place to wait.