Friday Was Great For Stocks - But Last Week Wasn't

I suspect Friday's bounce made some people breathe easier. "You mean stocks aren't going to just keep going down and down and down? I might not lose all the money I thought I was going to lose?"...or some such thinking. None of it, of course, makes any sense.

In Bear Markets - which we continue to think we're already in for Stocks - you get bounces. And Friday's bounce wasn't even one of the RYFO (Rip Your Face Off) bounces that Bear Markets have made famous. It was more a kind of technical, let's call it, "adjustment" resulting from the so-called "rubber band" being stretched way too much (that rubber band being various indicators like the distance of the market price from short-term averages, etc.). 

So much for Friday.

So what actually happened last week? Just this:

- Stocks (SPY) down -2.34%

- Gold (GLD) down -3.78%

- Bonds: remain the mystery asset. Is the long-term Bull Market that fired up around 1980-82 finally, irrevocably over? We're starting to think so. 

- And let's give a shout out to inflation while we're at it. It's not an asset, but it sure has a lot to do with all assets. The spin on last week's numbers was that it wasn't as bad as the most recent numbers. Any reason to think it's actually easing - finally? Doubtful. Things don't go either up or down in an absolutely straight line. At this point, that's something we know. As for whether inflation is easing, we can't say.

All in all, last week was pretty miserable, except for bonds. Yields dropped a bit. But nothing to write home about. And nothing that weighs against that long-term bond bull breathing its last.

Our portfolios lost a bit of their mojo. Yeah, we enjoyed that first quarter bump, followed by a modest down month in April. We remained ahead of the pack (stocks, 60/40, most other indices) because our asset allocation got some bracing gulps of juiced precious metals, commodities with a dash or resource stocks. But all that turned south, leaving us in the company of the miserable. Not quite as bad, mind you. But no loss is a good loss. So we're negative for the year - albeit it relatively less so than the mainstream.

What's coming up? Well, as short-term bounce for stocks shouldn't surprise anyone. What about Gold? Our guess: It'll remain in correction mode for a bit more, maybe into the summer - which may be around the time the stock bounce (if it indeed comes about) exhausts itself. At that point, the general stock market starts heading down again and our portfolios pick up where they left off in April - looking down on the world, humble but satisfied. 

Then again, who knows?

One thing we can say with a smack of certainty: The Bear has come out around the world. One gauge that shows it: our source that uses algorithms that measure momentum, hence trends, for various items ranging from broad market indices to individual securities. Everything is assigned a color: Green, Yellow, Red. (You can figure out what's good, bad, neutral.) Here's the Market Outlook as of May 13th:

• Green: Australia, United Kingdom
• Yellow: Dow 30
• Red: S&P 500, NASDAQ 100, S&P 400, S&P 600, Russell 1000, Japan, Canada, Hong Kong, Russell 2000   
  

That's a lotta Red - ya think?