A New Bear Market
The technical definition of a bear market is -20%, however it appears that confirmation of bear market will arrive around the same time Trump is confirmed. I suggest that for true believers that will be far too late.
But first, let's recap events to date. December started off with the longest losing streak for the Dow in 50 years - since 1974. The days of Watergate.
All of that risk quickly got ignored as the most anticipated Santa Rally in history began at cycle extreme valuations.
Which led to the worst Santa Rally in 68 years, since 1952.
The net effect of the Santa Rally was to work off the oversold condition that was created by the record Dow/cyclical stock selloff. Which is what we see in the chart below which I showed on Twitter. The % of NYSE stocks above the 50 dma (red) is clearly three wave corrective at a much lower level. The Dow itself is barely off the lows. And in the lower pane we see that the NYSE breadth oscillator is back to overbought.
Now, starting the first full week back from holidays, markets are once again RISK ON having ignored all of the risks described above. Nevertheless, I am now officially asserting that we are already in a bear market that has yet to be officially confirmed.
For further proof, here is a chart of Momentum Tech going back to January 2022 which is how that bear market got started - with a big short covering rally to begin January. Followed by a massive crash into the end of January.
One Wall Street prediction that is ALREADY wrong in 2025 is that the market would broaden out. What we saw during the Santa Rally is that Tech dominance has now reached a new record once again by Nvidia which was the leading stock in 2024.
In 2024, Nvidia gained a record $2 trillion in market cap. In other words the stock has now tripled in one year.
In summary, investors are all waiting for Trump to be confirmed, which is very likely when the bear market will be confirmed.
Which is what I call "too late".
By the time Wall Street officially acknowledges that a bear market has started the carnage will be MASSIVE.
Believe it, or not.
