Is this bear market in stocks over?

By RecessionALERT on November 24, 2022 in Reflections

Without a doubt, a U.S recession appears to be baked into the cake. We can’t say it is going to be severe, but what we can say is that the indicators suggest it will be non-trivial:

The big question on everyone’s minds though, is if the US stock market has fully discounted for this and if the bear market bottom is in. Our research on the common factors observed at recessionary bear market bottoms shows that only 3 of the 5 main factors were observed so far.

Whilst the above model (and their ilk) is excellent for signaling proximity of major stock market bottoms, the problem with observing “panic flushes” it that they often peak BEFORE the stock market trough.

For our full market commentary around the major items to be on the lookout for together with these panic flush counts, which have reliably pinpointed stock market bottoms with accuracy, read our research “Timing market entry in new bull markets“

About RecessionALERT

Dwaine has a Bachelor of Science (BSc Hons) university degree majoring in computer science, math & statistics and is a full-time trader and investor. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT into a company used by hundreds of hedge funds, brokerage firms and financial advisers around the world.

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IMPORTANT DISCLAIMERS: Although many of our models rely heavily on back-testing, optimisation and probability methods, please note that past performance is NO GUARANTEE for future returns. No system devised by man can predict the future, let alone the future of the markets and economies. What we have are sets of mathematical models that use historical data and varying theories to pinpoint places in time when the STATISTICAL LIKELYHOOD of calling the start and end to recessions is the greatest. In the midst of all the best mathematical models, you can have geo-political events, wars, terrorist attacks, natural disasters and even nuclear accidents that tip everything upside down. This is always a risk factor you need to factor in on any recession call no matter how confident you are in a signal. The SuperIndexes are created through mathematical and statistical optimisation techniques that best fit the historical NBER data. There is no guarantee that out-of-sample performance will match that of prior in-sample performance.