There is something that isn’t quite right about Friday’s S&P 500 upside reversal, even though e.g. value performance ticks all the boxes. Credit markets didn’t convince me – sure, part of the story is the reassessment of Fed rate hike prospects (the 50bp one for Mar FOMC seemed baked in the cake not too long ago), but it’s the HYG performance that doesn’t cut it. Stocks are getting (almost imperceptibly) ahead of themselves – and will do so some more as I’m looking for modest appreciation in S&P 500 to start the week. The bears though would assume the reins next as we’re still heading lower. Not to price points such as 3,920 or lower, but still down from where we are now.
Monday’s analysis will feature my 2022 stock market outlook, which simply has to be downgraded in light of recent events that are by no means over yet. Instead of a modest appreciation, we’re looking at neutral at best, more likely a slightly down year in S&P 500, and I have already revealed what’s going to do best within paper assets.
As I have written a week ago:
(…) So, risk-on appetite returned, and market breadth has significantly improved – within the context of the ongoing correction, must be said. While we made local lows on Thursday after all, the upside momentum is likely to slow down next – the coming week would bring a consolidation within a very headline sensitive environment. It‘s looking good for the bulls at the moment – till the dynamic of events beyond markets changes.
We’re going to start seeing cracks in the stock market bulls’ dam next.
Stay tuned for Monday’s extensive analysis, and have a nice rest of the weekend.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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