Have markets finally bottomed?

The Nasdaq is up 17% in 2023.

The S&P 500 is up 9% in 2023.

Something is going on, and we want to get to the bottom of it.

Bear market rallies are common: In the 2008 crash, there were four major rallies of 10-25% — each lasting 0.5-2 months before markets finally bottomed.

Is this simply another bear market rally? Or…

The start of a new bull market?

Being optimistic in 2022 has burned us before, and we can still feel the pain pulsing through our bodies.

• A 16% rally last summer ended with another decline that sent markets even lower.
• Now, the S&P 500 is on another 16% run since last October.

Instead, let’s ask….

Have markets bottomed?

Blow the dust off your history textbooks because we’re taking a trip back to the past.

History tells us: Stocks bottom before the Fed stops raising interest rates.

1/ How far in advance? Mark Hulbert (MW) analyzed six rate hike cycles in the past:

• Markets bottomed 57 days on average before the end of the cycle.
• But the number of days before ranged from 0-176.

2/ When will the Fed stop raising rates? Many expect the next interest rate hike on March 22 will be the last one this cycle.

If that’s the case, that puts us at 46 days before the end of this hike cycle.

As we get closer to March 22, the odds of the S&P 500 falling below 3,491.58 (52-week low) seen last October become slimmer and slimmer.

But whether markets move even higher (or stay sideways) is another question.

TAJ: Buy the dips, ride the rips.