Market Notebook

by | Sep 4, 2022

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Discussion – 

PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND closed lower last week.

TECHNICAL ANALYSIS:
Prices for equities and bonds appear to be in a short-term downward trend within a wider area of price consolidation. Price action has been decidedly short-term bearish. This is especially true for bond prices as they retreat towards a possible re-test of the June 14th lows. The area around the June 14th lows in bond prices establishes the lower bound for a wider area of consolidation. A significant breach of those lows would be more bearish still.

SENTIMENT:
Market participant sentiment appeared negative during the last week. The overarching macroeconomic challenges associated with inflationary pressures seemed to temper purchasing enthusiasm. Participants seem to be looking for even the slightest of signals that the Federal Reserve might change course on rates before bidding prices higher. In lieu of such signals, sentiment is likely to remain neutral if not bearish.

ECONOMY AND FUNDAMENTALS:
Regarding the real economy, the status quo has not changed. Significant inflationary pressures remain in the real economy, and the Federal Reserve continues to act to reign in those pressures. As odd as it sounds, expect rallies on news that the real economy might be struggling. Market participants will likely view such news as a signal that the Federal Reserve might change course.

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. Since both equity and bond price movements became decidedly more bearish during the last week, consider being more defensive and less speculative during the week ahead.

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.