The Pomp Letter: Here Is Good News About the Stock Market & Bitcoin

Market uncertainty remains high. Monday’s 3% drop and the big gains on Tuesday, Wednesday, and Thursday, suggest that volatility is still the name of the game. But within that current market fear, there are some signs that things may start trending better in the months ahead.

One sign is that the more markets decline, the more likely they are to recover. Statistically, once stocks hit a 20% pullback, they tend to find some strength. Markets hit such a level last week.

Plus, global liquidity is on the rise along with the current uncertainty. Central bank liquidity gives businesses time and wiggle room amid trade and tariff headlines. Rising liquidity tends to mean higher asset prices over time, including stocks, gold, and bitcoin.

Usually coming out of a bear market decline, more speculative assets see the biggest returns. That includes small cap stocks, and in more recent cycles, bitcoin. Given the market’s love of big-cap tech stocks over the past few years, those companies may also benefit from a rallying market. However, there could still be a shift underway towards smaller-cap stocks.

While there’s no guarantee that stocks have bottomed, statistics make the case for stocks to find their footing here. Investors who start to put capital to work can likely see reasonable returns in the months ahead.

To see the full analysis behind the market pullback and what it means, click here.