The sideways action in the market since the April 9 Fed decision to add $2T in monetary stimulus really highlights how tough it is to come up with a conviction in either direction during the “frustration phase” of the long-term bottoming process. The monetary and fiscal stimulus seems to get bigger by the day, yet the economic and earnings weakness becomes evident with each data point released. When the S&P 500 (SPX) was down 34% from peak in a panic associated with historic levels of correlation, oversold, and pessimism—we highlighted the market has almost always seen a sharp recovery of nearly 20%; but, now those factors are no longer extreme.

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