Mark Newton: Market Bottoming Process May Have Begun, Economy and Earnings Don't Justify Fear

Market Bottoming Signals

• 💡 Capitulation evidence is emerging, with the equity put-to-call ratio nearing one (0.95 last week), a level often coinciding with market bottoms.
• ⚡ A 90% up day was observed last Friday and Monday, indicating significant upside movement after a steep decline, suggesting a potential low is near.
• 📈 The VIX curve inversion is another indicator suggesting fear is turning into capitulation.

Economic and Earnings Justification

• ⚠️ The current level of fear in the market is not justified by the state of the economy or earnings, according to Newton.
• 📊 High-yield bond spreads have not widened sufficiently to indicate a true market sell-off, suggesting much of the tariff-related concerns are already priced in.
• 📉 While technology stocks have seen sell-offs, valuations have become more favorable, and technology remains a key profit center for the future.

Market Decline Characteristics

• 📉 The recent decline has been orderly and concentrated, primarily in technology, rather than a broad sell-off in risk assets that would signal a bare market.
• 🌍 There are opportunities outside the US, including precious metals and treasuries, and many diversified assets are performing well.
• 🛠️ This is considered a