Short Squeeze or New Up Leg in an Ongoing Bull Market?

Since the recent reaction lows of April 2nd, most major U.S. stock market indexes have posted solid gains. If we include today's intra-day highs, the S&P 500 notched a 6.41% gain while the Nasdaq Composite and the Russell 2000 saw advances of 7.23% and 7.36%, respectively over the last 13 trading days. Through any lens, these are spectacular investment returns considering the short period involved!

So what's the answer? Have we just witnessed a massive short squeeze within a NEW bear market (which began in late January 2018)? OR, should we categorize the dramatic declines in February and March as just natural "corrections" in an ongoing powerful bull market?

In the interest of full disclosure, I began shorting the U.S. stock market in the last hour of NY dealings today. Despite the fact that "after hours" U.S. stock market futures are higher this evening (Wednesday, April 18), I strongly believe that bearish forces will soon re-emerge that will quickly dominate the financial landscape (taking the obvious negative toll on investor capital).

For me, the bearish case is front and center as showcased in the banking sector. The under-performing Bank Stock Sector Index (symbol BKX) is weak and getting weaker despite supposedly bullish higher U.S. interest rates (and relatively strong recent earnings):

Bank Stock Index (BKX) Daily Chart with 200-day Moving Average Line

S&P 500 Index Daily Chart with 200-day Moving Average Line

Bottom Line: Higher U.S. interest rates, ongoing hawkish actions from the U.S. Federal Reserve, and relatively weak bank stocks will serve to castrate the overall U.S. market for equities on the immediate horizon. Lower stock prices are likely over the very near term, with a complete reversal of the recent advance and a probable violation of the key 200-day moving average line on the downside. And here is another negative chart in support for the bearish case: A sell signal was triggered today by my computer trading system in the Utilities Sector Index (symbol XLU).

Utilities Sector Index (XLU) with 200-day Moving Average Line (& computer sell signal today)