Yesterday's action demands a commentary even though we will be doing nothing in the RTR portfolio, states Steve Reitmeister of Reitmeister Total Return.

However, you deserve for me to put all the cards on the table so you know precisely what I am thinking and why.

Imagine writing my commentary Tuesday where there was good reason to believe that the market was topping out after reaching the May/June highs and running out of steam. Plus, recent market leaders were giving up profits as could easily be seen in HIBS's outperformance. All in all, the stars seemed to be lining up for this rally to come to an end.

Then on Wednesday morning, the CPI comes out at 8.5% and the market explodes higher, pushing the upper bounds of TheDowTheory signals (one part has fallen over to bullish...but not the technically speaking we have to wait longer for confirmation before changing from bearish to bullish...and that is why we are doing nothing at this moment. More on this further below).

The bulls out there want to say that this CPI report is proof positive that inflation has peaked and disaster has been averted. Pardon me...8.5% versus 8.7% is a sign that things have peaked???

Mathematically speaking, it is barely lower. Worse yet, it is still four times hotter than the 2% inflation target rate of the Fed leading them to still dramatically raise rates in the future. And pretty much everything other than energy prices is still rising far too much, including food (yes, we all still need to eat). All in all 8.5% inflation is still plenty high enough to ravage the economy leading to future recession and lower stock prices.

I am truly dazed and confused by the myriad of inputs at this moment and thus the plethora of diverse outcomes for stock prices. And I really don't want to make a move that seems foolish. Like getting tricked into a more bullish portfolio at precisely the time the bull run ends (the Murphy's Law version of investing).

I could make a case that even if this is the new bull market that typically just as stocks touch new levels they often have a 2-3% sell-off and then rally higher. So perhaps not wise to get long here even if bullish.

Or the idea that the market is controlled by algo traders who know all the key technical signals. And there is nothing in the world they enjoy more than pushing things just past these levels and then reversing course to maximize their gains. So, I am fearful of getting suckered into a rally that immediately ends.

Next consider that in my opinion, nothing has truly changed from the bearish premise I wrote last week and doubled down on yesterday. That this looks like a long-term bear market not unlike 2000-2003 which took quite some time to fully unfold with many impressive bear market rallies tossed in before the final bottom was found.

However, I also have to admit that I stubbornly didn't get on board the post-Covid bull market til stocks already rebounded more than 30%. And I refuse to let that happen again, which is why I am allowing TheDowTheory to enter into my market timing equation.

But here too...I remember their bullish signal going off in November 2008 for an impressive bear market rally that fizzled before the market tumbling to a much lower bottom in March 2009. Like I said when I introduced them to indicator has a flawless track record.

I have considered many scenarios today of what to do. Because it's the kind of day that demands you do something. But read today's email again and you can see why making that move is hard given that this could be the last gas of this bull run.

However, I am prepared to act...yet in a slightly different fashion than laid out in my recent commentary.

If signal turns 50% bullish in the coming days (need the DJIA to close about 200 points higher) then my first move will be to go from net short as we are now to neutral. This means to sell all short positions...yet not add any longs.

Why not buy stocks or long ETFs? Because of the section written above...

"Or the idea that the market is controlled by algo traders who know all the key technical signals. And there is nothing in the world they enjoy more than pushing things just past these levels and then reversing course. So, I am fearful of getting suckered into a rally."

So going from short to neutral decreases the risk of the above happening. This way, if the market does immediately retreat, we are not unduly harmed. And if it really starts to roll back into the long-term bear market I believe it to be, then easy enough for us to add more shorts to the mix.

On the other hand, if the bull party continues, then we will start adding long positions. To be clear, I will have a quick trigger on this because I don't want more than 1-2% to go by the boards to prove confirmation that the bull signal was for real and not just games that computer traders play.

I will also go on record with the following. If this is indeed the start of the next bull market...not only will we participate, but I will also remove market timing from the RTR mission. This means we will just be a stock/ETF picking service that no longer ponders the bull/bear equation.

Yes, I know that sounds extreme. But consider this....a bull market rising at this time would be confirmation that the market no longer coincides with anything from history. And if that is the case...then there is virtually no way to do market timing in a healthy/accurate way. And so there would be no point in trying.

This point was made to me by a trusted friend in the industry who is the data scientist behind the POWR Ratings. He has enjoyed such consistent outperformance with these top-rated stocks, even during bear markets, that he spends no time pondering the bull vs bear equation.

I appreciate his point shared by many others...but I have enjoyed market timing success in my career. Especially during the financial crisis of 2008/2009 when I shorted the market with both fists to turn early losses into impressive gains when all was said and done.

Back to the point. You now appreciate where I stand. It just might take you a couple of reads to get through all the "buts and howevers" to appreciate the totality of today's statement.

Here is the real key. This is what I am going to do and why. You have every right to disagree and find a bullish or bearish path all your own.

I just ask that no matter what you do, please have a contingency plan in place if things don't go according to plan. That's because there is nothing the Market Gods find funnier than pulling the rug on investors just as they change direction.

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