maybe thats the only fair answer to whether last weeks upside reversal – violent and rare as it was in scale and speed – will prove important as a market turning point or even matter at all such things are only knowable in retrospect in the moment there literally is no answer – whether the market has turned depends on many economic developments unforeseen bolts from the blue and crowd reactions to come if it were a matter of purely random chance then the uturn from 24 opening drop in the s  p 500 thursday after the disappointingly high cpi report to a 26 gain was probably not a decisive inflection bear markets have only one ultimate bottom but many interim lows along the way after all fridays enervating slide relinquishing about a third of the entire ramp from thursday low to friday high lifted the burden of proof a bit though does leave in place some hope that the recent lows were in the buy zone for some pricesensitive bidders if no one can confidently assert the weeks import its also not crucial to make a bold call we can at least run through what we know about this market and how market cycles tend to unfold more generally explaining thursdays mystery rebound as jarring and unexpected as the cpi whipsaw rally was thursday it happened at a logical moment and intuitive place the s  p 500 into the thursday morning low of 3491 was down 15 from before the prior cpi report a month earlier had fallen six straight days and at 3500 had given up exactly half the monster rally from the march 2020 covidcrash low to januarys alltime peak which is to say the tape was overstretched and there was plenty of tactical focus on these price levels as a potential culmination zone for the latest downdraft as noted here last week  3500 is also a 27 total loss from the high – the median historical decline for recessionrelated bear markets and almost exactly 15times forward earnings some 40 of total trading volume was in etfs an unusually high proportion of topdown tactical activity showing shortcovering and a rapid grab for equity exposure by fastmoney actors thats not to dismiss a fivepercentagepoint intraday swing that encompassed the prior three days index range as purely mechanical or meaningless noise such switchbacks often occur when sellers have exhausted themselves fewer individual s  p 500 stocks made a new 52week low than in midjune even as the index itself undercut the june low a modest positive glimmer as bespoke investment group tallies it rarely in the past three decades have up days been as rare as they have lately the prior extreme lows on this chart were near noteworthy market lows if not always right at them a oneday pop to a oneweek high followed by fridays slouch back below 3600 was likely not enough to burn up all the negative sentiment or get all the big money thats been mispositioned for a rally onside again thus the chatter among interpreters of supplyanddemand dynamics in equities that the pain trade probably remains to the upside in the near term perhaps at least for another several percent that would be a switch october known for bottoms and not that anyone could forget its october the month known both for searing volatility and a knack for creating bottoms the stock traders almanac notes that of the 23 s  p 500 bear markets since world war ii seven ended in october and the six months starting in november of a midterm election year have been higher every time since 1950 this could well be read as some blend of superstition coincidence vague seasonal rhythm and small sample size and for sure the mechanical triggers of the bounce and very wellknown seasonal tailwinds might make it seem more forced than organic but the precedent is what it is and one could easily have said the same about the gloomy september seasonal record which was borne out this year when the market has been down a lot threequarters of the way through the year the following quarter and 12 months have tended to see stocks higher – with the glaring exception of 2008 as the financial system seized up into a credit crunch and vicious recession similar story for buying stocks when the s  p has shed 25 even when the market then went a good bit lower on average the market was up a year later and even when not the damage over that period was mild be careful what you wish for the palliative sentiment seasonalpattern and longterm meanreversion tendencies noted here highlight that the bull case is all about atmospherics the cautious or bearish elements are the ones right in front of the market the inputs to realtime risk appetites and valuation in the simplest terms its still a clear and persistent downtrend rallies arent particularly trustworthy under such circumstances earnings forecasts are slipping the s  p 500 has failed in four tries of since late august even to get above the shortterm 20day moving average most recently on friday the biggest and most widely owned index stocks – the nasdaq megaliths except apple  still look the weakest just about all inflationreport surprises in the past year have been to the upside the 10year treasury nudged above 4 and federal reserve officials continue to suggest they believe substantial economic pain will be needed this puts many investors in a be careful what you wish for mindset in which a nearterm pause in fed tightening is seen coming only in response to some sort of financial accident the logic is clear and no one knows what leaks might have sprung in the system uk pensions and bond market collapsing japanese yen but im willing to suggest that the hunt for black swans in itself reflects scarring from the 2008 global financial crisis as much as it does a calculated assessment of clear and present dangers back in 2008 after all every investor and observer wasnt out there saying watch out for a rerun of 2008 as they are now is forewarned forearmed how much is left to the selloff circumstance suggests being more circumspect than usual in handicapping how much is left of this retrenchment period for the markets and economy this cycle has been idiosyncratic or even unprecedented on the way up and down wed never before had a flash recession shortcircuited by massive timely fiscal and monetary response or recovered a 35 stockmarket drop as quickly as we did 2020 if a recession is coming but doesnt strike until 2023 it would seem the market peaked too early in january based on normal historical lead times and a market low now would seem too soon based on the pattern of stocks hitting a low during rather than before a recession a multidecade downtrend in bond yields was busted the fed has dusted off a 40yearold inflation war plan weve lived with rates at these levels not too long ago sure and economies and markets can adapt but rates never got here from zero or rose this fast before mortgage rates from 3 to 7 in six months its plausible to argue that much if not all of the needed reset in valuations expectations and risk profiles has been done that big important stocks such as jp morgan  nike and walt disney are down on a threeyear basis and have been relieved of whatever pandemicstimulus fluff they once held that markets always bottom before the economy turns and the indexes dont tend to spend all that much time at the ultimate lows wherever they lie all valid points ive made them a few times lately no one quite knows when they will matter