Summary

This is a technical analysis article on the SPY ETF. Professional traders hate risk and love "sure things." Why? Because trading is risky enough. They prefer to make money the easy way.

They are always on the search for contrarian trades that are a "slam dunk." Why? Because they don't want to be fired for being wrong.

They love being right all the time and getting big, fat bonuses at year end.

So what is a slam dunk in this bear market? Knowing that the Fed is in a bind and has to take the economy down which creates the bear market we trade.

What is the slam dunk rule? Buy puts or some other short strategy after every bounce, until the bottom bounce, which is still a very long way off.

The easiest way to make money in a bear market (NYSEARCA:SPY) is to short every bounce as long as there is no bottom in place. There is no bottom in place yet for this market. TheSPY is targeting a retest of $364 and there is no indication that $364 is the bottom. The SPY could still go lower, based on the bind the Fed is in, because the Fed is targeting a 2.2% inflation rate. That is a long way off, and so is the bottoming process in the SPY determined by that Fed target.

Isn't Trading Very Risky?

Trading is risky enough, so the only way to reduce risk is to find slam dunk trades. To do that with any stock or the market, traders look for "research" that gives them the lowest risk, successful trade. That "insightful information" is hard to come by usually. However, in the case of this bear market, everyone has that insight, because the Fed is giving it free to everyone. Fed Chairman Powell just warned of the "pain" that is coming to bring inflation down.

Because the economy was running hot, with very high employment and very high inflation, the Fed has told us what they are going to do. Even if the Fed did not tell us, it was easy to see what they would have to do. With that knowledge we know this bear market will continue until it bottoms. With that obvious conclusion, we can find a way to make money in this bear market.