To The Moon

Dead cat bounce is a concept in investing, that draws analogy to when u throw something from high enough height, it will at least bounce a bit upon contact to the ground.

Even a dead cat thrown from height, will bounce a bit in theory... please dun try In reality. In reality, could become watermelon instead of seeing a bounce.

Are we currently in a dead cat bounce for S&P 500? 

I do suspect so From the following:

1. Macro trends:

Russian war is ongoing.

China lock down have yet to be lifted

Covid is still ongoing 

Supply chain disruption is ongoing 

Inflation is still stubbornly high without forming a plateau. 

interest rates will likely continue to go up.

The above are currently still negative and doesn't provide support for the rally to extend.

The only rallying call will be by Biden And the democrats who will need to save themselves from coming mid term elections. They will have to "talk up" the markets or take action. Otherwise, there would likely be a switch to republicans post mid term election. 

2. Valuation of S&P 500

BAsed on inform from multipl.com

Current PE for S&P 500 is 20.11.

Vs mean at 15.97 or median at 14.89.

If we compare against mean, 15.97

20.11-15.97 = 4.14

Over value of 4.14 against current pe

4.14/20.11= 20.587% over valued.

S&P500 current value is $397.37

Assuming 20% over value, we will be looking at a drop to $317.896.

Of course, this is a simplistic way of lookingat it, but then again, there's a reason y average is called average isn't it?

Over time, valuations revert to the mean.

In conclusion, eventually S&P 500 will enter into bear territory as valuations will revert to the mean. 

However, in the short term, with such a fast and severe drop, there will certainly be a bounce or rally back.

How high will the bounce go?

Guess it depends on which cat is bouncing. 

Garfield and Tom, won't die from the fall butwill bounce to diff heights.

Maybe just maybe, maybe we can have this "cat"?

Eventually, IMO, the recession will still loom.

After the damage that's whacked by Covid-19, Ukraine-Russia war, we cannot expect the world'a Economy to do a flip of hair, and be back to normal. 

The stimulus were used, somebody will haveto pay back eventually...

Just my 2 cents worth.

Invest safe during these volatile times.

@TigerStars