Market Notebook
Discussion –
PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND closed lower last week.
TECHNICAL ANALYSIS:
Technical analysis suggests equity prices remain in an upward trend while bond prices remain in a wide area of consolidation.
The ongoing bear market in the S&P 500 continues.
SENTIMENT:
Market participants did an “about face” with sentiment turning bearish last week.
ECONOMY AND FUNDAMENTALS:
Significant inflationary pressures remain present in the real economy, and the Federal Reserve continues to act to reign in those pressures. Interestingly, based on how PCI measures are calculated, the headline print for inflation will likely remain at current levels well into 2023. An excellent discussion of such can be found via the following link: Research Associates.
Continued elevated levels of inflation erode consumer purchasing power and contract corporate margins. As such, corporate earnings reports are likely to drive volatility in the coming months. The question becomes, “How well can companies maintain margins and profitability in the current inflationary environment”? The answer is likely to influence forward volatility highly.
SINGLE STOCK:
For fans of Netflix, the stock, not the service, management is making a believable case for solving recent growth issues. See the Q2 Earnings Interview.
NEXT WEEK:
During the coming week and primarily based on technical analysis, the doors remain open for equity and bond purchases within portfolios should purchases be required. Be mindful that negative sentiment from last week could easily carry over into the coming week.
All the best during the week ahead!
Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.