The Current Doom Plaguing Markets is Rare and Very Bullish for Stocks

The recent downturn in stocks is so pervasive and unforgiving, it’s actually extremely bullish from a mean reversion standpoint. Although the action hasn’t achieved the green light from Exodus yet, by way of oversold signal, the horrific breadth in two of the past three trading days is very rare in its deleterious nature and is robustly bullish for stocks.

When breadth delves into the abyss like this, floating around the 10% range, in every occasion dating back to 2012 the market had rallied in a significant manner, shortly thereafter.

Here are the stats (note the breadth column)

If I was running public money today, I’d advise against shorting or selling into the hole here. Bear markets are rarely starting like this. The sort of action you’re bearing witness to now is more of a trap than anything else.

Since I’m already allocated with 75% of my cash to short FCX, long gold, long treasuries, I will not take advantage of this dip to gain long exposure. Instead, I will wait to see if the market legs down one more time, hoping to get an Exodus OS flag.

I understand this runs counter to my long term bearish thesis. However, I am merely providing you plebs with market data and probability in an effort to make better decisions. Being armed with this data enables to me calm the fuck down and understand that this market behavior has bee seen before and the results have been bullish for stocks.