One Chart That Indicates This Bear Market Is Ending

There’s a lot of noise in the stock market right now. But if you focus on the one thing that matters most, you’ll be able to clearly see that this bear market is ending. And a huge new bull market is coming. 

The stock market has been on a wild ride in 2023. Up one day. Down the next. Stocks have been volatile because economic conditions have been volatile. 

One day, it seems inflation is crashing and the economy is chugging along just fine. Then there are signs of reinflation and folks fear we’re on the brink of a deep recession. 

Volatile conditions. Volatile market. Makes sense. 

But the thing about volatility is that it always ends, resolving in either a huge breakout or huge breakdown. 

I think a huge breakout is coming. 

Why? 

The Fed. 

Why a Huge Breakout Is On the Way

When you zoom out, you realize that the Fed matters more than anything else – and by a wide margin. 

The Fed controls money supply, aka how much money is circulating in the economy. 

When money is flowing, the economy is booming, and stocks are rising. 

When it isn’t, the economy is struggling, and stocks are falling. 

It’s really that simple. 

It all comes down to the Fed. 

The Fed began talking about starting a rate-hike campaign in January 2022. Uncoincidentally, that is when this bear market started. 

Now we believe this bear market is about to end because the Fed is about to stop that same rate-hike campaign. 

The central bank has a dual mandate: stable prices and full employment. It’s been hiking rates aggressively because prices aren’t stable, and employment has been full enough to absorb those higher interest rates. 

But that’s changing now. 

Prices are stabilizing, with inflation pressures cooling rapidly. Meanwhile, the labor market is starting to crack, and layoffs are piling up. 

With inflation cooling and the labor market cracking, the Fed will be forced to pause its rate-hike campaign very soon. 

Essentially, the market sees 100% odds of a “Fed pause” by June. 

You know what happens after Fed pauses? Stocks rally – and, in particular, tech stocks soar!

The Final Word on the End of the Bear Market

The chart below graphs the 12-month forward trajectory of the tech-heavy Nasdaq Composite after each major Fed pause since 1980 (excluding the 2000 pause). 

Each time, tech stocks soared over the next six and 12 months. 

Average final 12-month forward returns? About 26%. 

Average peak 12-month forward returns? Over 30%. 

In other words… 

Since 1980, every single Fed pause resulted in tech stocks soaring an average of about 30% at some point over the following 12 months (excluding 2000). 

Fed pauses consistently equal 30%-plus tech stock rallies. 

We don’t believe this time will be different. 

With a Fed pause coming in about six weeks, there’s a massive tech stock rally coming that could help you mint fortunes in a hurry. 

But are you prepared for this massive coming rally?

Fortunately, we spent the past four months compiling a superstar portfolio of the five best stocks to buy for this incoming rally. 

Yesterday, we debuted that powerhouse portfolio in a brand-new presentation. 

If you weren’t able to attend, don’t fret… You can catch a replay – and gain access to this superstar portfolio – right here.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

The post One Chart That Indicates This Bear Market Is Ending appeared first on InvestorPlace.

inflation
money supply
interest rates
fed
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