On Twitter today there some griping by some that a market pundit on CNBC was calling the current stock market a “bear market.”

I actually agree with that assessment, but I’ll get to that in a minute.

Wall Street likes to use various labels and categories, and one thing it hates to do is put the Bear Market label on the stock market.

That scares investors away, and if investors are sitting on their hands, Wall Street doesn’t make money.

Therefore, Wall Street doesn’t like to throw the “bear market” term around unless the S&P 500 has closed at least 20% below its recent all-time high.

This is how they were able to categorize the stock market from the 2009 bottom all the way to the pre-pandemic top as one giant bull market, even though there were bear market conditions in between.  2011, 2016 and 2018-2019 come to mind.

So, when someone mentioned the term today, a few people took issue, since the S&P 500 is only in “correction territory” or, 10% off its highs.

From my perspective, as I explained in a post a few days ago, there hasn’t been much to like about this market.

Back then, I suggested that Dow Theory was flashing yellow.  As of today, it is flashing RED.  What does this mean?

All it means is that the primary trend of the stock market is down.

The fact is, while the major averages such as the Dow Industrials and S&P 500 have been trading in a choppy manner with a downside bias since early January, the rest of the market has been considerably weaker.

This is the chart of the iShares Russell 2000 Index Fund ETF.  As of today, it is trading over 20% below its high close in early November.  That’s a full two month lead time on the S&P 500.

Alot of money is being lost in this market.

The problem, as I mentioned before, is that the Fed is now on the verge of raising interest rates (although the market has already been doing that) to begin its fight against inflation.

Furthermore, the price of crude oil is trading at seven year highs, and it has been a swift rise.  Significant and substantial rises in energy prices often lead to recession.

We also have massive increases in home prices and rents, and food inflation, which is why the Fed needs to hike rates.

Lastly, we have the uncertainty surrounding the situation in Ukraine, and a White House that appears not to be up for the challenge of anything it is facing.

So, what does this all mean going forward?

The stock market tends to be a leading economic indicator.  If investors feel that corporate earnings are going to take a hit in the foreseeable future, they sell stocks.

Corporations are being squeezed by inflation.  They’ve been able to pass along much of the price increases.  But, at some point, consumers will start to pull back.

I believe that began to happen in the third quarter of 2021.  Consumer spending in the last two quarters slowed a bit, but GDP was buoyed by inventory building.

That inventory building will stop if consumers continue to hesitate to spend money.  That is inevitable given that their heating and air conditioning bills, cost to fill up their gas tanks, grocery bills and rent payments are all going up.

The bottom line is that the bull case for this market is quite weak and the bear case is pretty strong.

Therefore, it’s time to hunker down.  This bear looks like it could last awhile.