The financial markets – what’s occurring 21 March 2022
Stock Indices have rallied since FED meeting lows on 16 March 22
Markets sold off on their statement and rallied as soon as Powell spoke in presser.
Their tone is hawkish but actions are mild.
The War is a headwind but seasonality is v positive at the mo.
While TINA has changed and there is an alternative to stocks in higher bond yields, markets just push higher.
The continued rally does not make too much sense in trems of the Macro headwinds but even I fancied them higher after FED meeting.
Price action that evening screamed BUY!!!!
This one is just HYPE
$TSLA +42% since the Fed meeting.
Little economic data in the US last week.
Much more out this week.
Consumer confidence has been weak.
GDP is just a revision of 4 th Q 2021
Personal income and spending -unlikely to move markets
Chicago pmi will point to possible recession
ISM manufacturing index – not a big influence on markets.
And the big one- Non- Farm Payrolls. How is employment going?
Hawks spoke last week of .5% hike at May meeting. Markets just looking at the short term!!!
State bailout of bogey companies had the desired effect.
Markets shrugging off Covid lockdowns in Shanghai.
Everyone getting excited by yield curve inversion – a harbinger of a recession!!
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Looks like a decade long down trend is over! 10yr US yields have breached the top of the trend line of the downward trend channel in which 10yr US yields traded since the mid-1980s.
U.S. YIELD CURVE, MEASURED BY GAP BETWEEN 5-YEAR AND 30-YEAR BOND YIELDS INVERTS FOR FIRST TIME SINCE EARLY 2006
“What is happening in the bond market should not be ignored. This is going to blow out the housing and equity market, particularly the $QQQ. These kind of moves are absolutely unprecedented.”
As mentioned, many times, the further in time we move from a major incident the less effect it has on markets.
“Many asking how $SPX rallied 400+ points on horrible news. It always does: Every low in history (see March 2020) occurred on a bearish news backdrop. “Markets climb a wall of worry”. If trading headlines instead of the chart, you’ll always be onwrong side. Vice versa for highs”
S&P 5.7% off closing all time high, not bad given- Inflation, rising rates, no QE, slow economic growth?, commodity shortages, covid spikes!!!!!
WE ARE ABOVE 20 AND 50 DAY MOVING AVERAGES, and the 200 DMA.
Look what is making ATHs
Naz new highs with a pick up, most since January.
Bull better enjoy this run as seasonality no bueno, from May on………..sell in May and go Away!!
Conclusion – sentiment and seasonality point to higher stocks!!!
Colin 01-6644034 0851722729
Risk management is vital.