Profitable Strategies for a Bear Market

Many traders have recognized that the market environment has changed significantly in 2022. Following one of the longest bull markets in history, its been difficult to sustain any upside momentum in recent markets. Some technology stocks are down nearly -80%, including the once high-flying AARK Innovation ETF (AARK). The technology bubble is bursting, inflation and interest rates are increasing and equity markets might be headed for a bear market.

Despite the S&P 500 Index being down approximately -15% in 2022, Algorithmic Futures' Quant Micro and S&P Dynamic trading systems are in positive territory this year. These portfolios are constructed with strategies that have the ability to outperform in any market environment. They trade both long and short positions in a variety of different trades. These include short-term intraday momentum strategies, along with mid-frequency mean reversion strategies.

Although no one knows how long the market environment will last, many people feel that we are in for a longer bear market given the current macro environment. If that is the case, a typical long-only investing portfolio will struggle. With interest rates rising, bonds will not likely provide the necessary portfolio protection in a diversified portfolio. Its important to equip your portfolio with strategies that can short the market in this type of environment.