This week was marked by slow but steady upward trend (S&P 500) closed at 4026 (+60 bp), while tech index Nasdaq could not gain too much and closed at 11756 (+70).
S&P 500 weekly candles
Also this trent is supported by VIX index. The market seem to calm down
VIX weekly candles
U.S. government bond yields continued to fall this week. US10Y Yield closes at 3,69%.
| Index | Closed at | Week % | YTD % |
|---|---|---|---|
| S&P 500 | 4026 | 1.5% | -15.5% |
| Dow Jones Industrial Average | 34347 | 1.8% | -5.5% |
| NASDAQ | 11226 | 0.7% | -28.2% |
| US 10-yr Yield | 3.70% | -0.1% | 2.2% |
Bullish sentiment
The upward trend continues and a lot of analysts believe that markets will continue to grow. Their arguments are:
- A lot of the bad news has already been priced into stocks already.
- Inflation trends lowered and if the Federal Reserve slows down on interest rate increases ( and eventually pauses interest rate hikes), a weakening dollar could become a tailwind for international equity returns.
- We see collapsing Oil Futures this week, should this trend sustain it will also to reduce inflation.
But this is also everything on the supporting side.
Bearish Indicator
Investors seem to ignore the fact that Feds targeted inflation is still about 2% and the USA is far, far away from this at the moment. If Fed reduce aggressiveness it doesn’t mean it will stop increase fed rate in the next month. Not this year!
The inflation in EU stays high with 2 digits, nothing positive here at the moment.
So the general background is still difficult and here is why:
- Inflation is still very high across US, EU and other part of the world
- Money Supply is declining every month by Feds actions
- Supply chain crisis is not resolved and could become a problem again because of the new lockdown in China
- Geopolitical problems: War in Ukraine, tensions over Taiwan, Iran unrests
Outlook (The week ahead)
This week the volatility (VIX) continued to fall and this should not be overseen. We also see mortgage rates falling again in US, so we can expect that the overall upward trend can continue also at least in the beginning of the next week. However we see some cooling and Nasdaq has entered sort of side movement in the last week.
To be aware of
| Monday | Tuesday | Wednesday | Thursday | Friday |
|---|---|---|---|---|
| . | Fed Chair Powell Speech | US Unemployment rate | ||
| . | US GDP Growth Rate | |||
| . | ADP Employment Change |
Interesting tickers
Stocks to watch out in the next weeks:
| Symbol | Price | Comment |
|---|---|---|
| ZIM | $22,50 | Signs of support |
| AAP | $147 | Signs of support |
| DDOG | $70 | Below this becomes attractive. |
| LUMN | $5.5 | Good pricing. Beware of an uncertain future. |
| NET | $40 | Below this becomes attractive. |
| AMZN | To early to define support levels | |
| GOOG | To early to define support levels |
Other than that, most sectors are overpriced now.
Stay careful! Happy investments!