Summer's Last Hurrah for Stocks?

OK, so stocks were up 4% this week - purported to be their best week since, I think, 2021 - or something like that. Does that really matter? Is it a "breakout"? 

Doubtful...er...no.

This view: that we're seeing strength before, well, something not-so-great coming.

Now a stock market correction is one thing. But what if what's coming is more than that? What if it's a true dyed-in-the-wool Bear Market. We really haven't seen one of these in a while.

The last time was during the COVID Mess (with a capital "M"). But that didn't last long, did it? The government drenched the economy and specifically all of us with cash in the form a digital Federal Reserve Notes. Remember that? We all got slugs of cash so that we could spend and support economic activity. And the Fed made sure rates were down by zero so that Wall Street speculators could borrow at 0% and buy stocks - on the dole, so to speak.

It worked. The economy revived after a huge dip. The stock market roared back after a huge drop.

What about this go-round - assuming there's a Bear somewhere down the road?

Well, all indications that we professionals learned in our formal and experiential education tell us that not only are stocks wildly overvalued, but that economic indicators have - for months, really longer than a year - been screaming "Recession!" for the economy and "Look out below!" for stocks. 

And yet really nothing of the sort has happened. At least nothing the government, the Fed, nor Wall Street will acknowledge.

Of course, many of us have already been feeling the pinch that comes with Recession. And so the "Recession is already here" camp has been garnering more adherents.

And many of us have been most cautious in our commitment to stocks, thereby dragging the returns on portfolios compared to the speculators who are all-in.

Then again, if you've got some allocation to Bonds, you may now be in for a treat. It seems yields are falling on the longer end. And that's driving up the price of Bonds. (See a chart of the ETF: TLT.) Indeed, if - or should we say "when" - more folks acknowledge a burgeoning Recession, Bonds should feel the heat of excitement and rise even further. Quick profits to be had for all souls who plow some money into these.

Then again, there's Gold. Let's not forget. Indeed, of all the action this past week, little notice was paid to the fact that Gold closed the week over 2,500 (spot price). And if you've got a reasonable allocation to it, you're doing OK, even if you're avoiding stocks, or hedging them in any way.

What's "reasonable"? Well it's not based on what most investment outfits are doing. Apparently those invested are down in the 2% range. And apparently most are not invested at all. If comparisons with what is defines reasonable, then perhaps 2% is reasonable.

But if reasonable's definition springs from a belief that we're in a powerful Bull Market in Gold that's got a ways to go, then 2% is decidedly not reasonable.

Back to stocks: Consider, perhaps, that recent action is a feint. Consider the possibility that what "should have happened" already (Recession, Bear Market) is itching to descend with a vengeance, then we could be in throes of a "last hurrah" for Stocks - at least for now.

Will any "correction" become a true Bear? Only time - and the government/Fed response to such a possibility will tell. They may indeed have yet another Big Kick left to keep the Can rolling and rolling.