The Gilmo Report

August 3, 2022

August 3, 2022 7:42 pm ET

A line-up of Fedheads insisting that they still have some distance to cover before getting interest rates to a place where they can fully slay the inflation dragon did not deter the market from pushing higher today. Some of it may have been helped along by a general sense of relief after China did not shoot down Speaker of the House Nancy Pelosi’s plane as it landed in Taiwan.

Most of it, however, is just a plain old bear market rally, and bear market rallies are often convincing enough to get everyone well lathered up. Recall my example of the Summer of 2000, when after a follow-through day on June 2, 2000, Bill O’Neil called for a major new bull market phase based on the precedent of October 1962. So, you see, even market gurus are not immune to getting lathered up during a bear market rally.

To be fair, however, and as I have also shown in recent reports, it was possible to make some money on the long side of that bear market rally, just as it was during the bear market rally of Spring/Summer 2008. The trick is being in the right stocks at the right time for just the right amount of time. That is a problem more easily solved in hindsight, to be sure, but we certainly have the tools to solve it in real-time while keeping risk to a minimum.

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