Is the worst of the market sell off over?

If we look at long term charts of prior collapses, it appears there is lots of upside to go.

I am less convinced that there is nothing but smooth sailing ahead. For markets to continue to rally, we likely need to avoid a major collapse in Europe, sidestep a recession in the US, and see some job creation and wage improvement here that can translate into improvement in retail, auto and home sales.

As of today, I remain dubious of that as an immediate outcome.

Still, the breakout last week ^[1] above the 3 month trading range at ~1220-25 last week suggests some more upside from here, assuming the new trading range sticks ^[2]. The playbook calls for a pullback and test of the breakout — traditionally, making for a great entry point — and if that test successful, the next leg up should then begin.

Hence, your posture is dramatically impacted by your time frame. If you are looking out 1-3 months, you are probably bullish. If your outlook is measured in 6-12 months, you might be less sanguine.  And the time between is anyone’s guess . . .

Here is what Doug Short called the “4 Bad Bears”:

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Click to enlarge chart:
^[3]
Source: Advisor Perspectives ^[4]