The market's meaningful bounce from key support levels indicates it is carving out a bottom, even though widespread uncertainty makes investors feel the market is still fragile. This suggests that current technical signals are more reliable indicators than sentiment.
The current environment, where forward price-to-earnings multiples fall significantly while earnings growth remains strong (up over 20%), is a classic sign of a temporary correction within a larger bull market, not the start of a prolonged downturn.
While tighter financial conditions driven by central banks are the main headwind for equities now, this very pressure is what historically forces a policy pivot. Therefore, the source of current market anxiety is also the likely catalyst for future relief and recovery.
The market has already priced in significant risks related to war, credit, and AI, with valuations and positioning having reset. The remaining risk is policy, but markets historically move ahead of policy clarity, rewarding investors who act before it's obvious.