David Rosenberg: The bear market rally is unravelling — here’s why

But, alas, there are many at the Fed who are stepping out and sounding more hawkish than the chair and more than the tone of the published set of Federal Open Market Committee minutes. No, no, no. The Fed is not done, and some are openly stating that they are ready to vote for another 75-basis-point hike at the Sept. 20-21 meeting.Article content

Just as the S&P 500 tested its 200-day moving average, reversed 50 per cent of the bear market decline in the first half of the year, and saw more than 90 per cent of its members rise above the 50-day trendline , the index has now hit the wall. No kidding. A near three-point P/E multiple expansion in two months’ time doesn’t exactly happen every day.Also keep in mind that since the June lows, four stocks have done the heavy lifting for the S&P 500 — Apple Inc., Microsoft Corp., Amazon.

: “Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.”Article content But now the real interest rate is on the rise. High-yield spreads are starting to widen again. The U.S. dollar is beginning to firm. Profit estimates are coming down, and guidance is generally poor. Global demand is clearly fading as the Commodity Research Bureau index was sitting at 625 at the mid-June FOMC meeting and is down to 588 today.

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