Market Notebook
Discussion –
PRICE ACTION:
Equity prices, as measured by ticker SPY, closed higher on the week, while bond prices, as measured by ticker BND, closed lower on the week.
TECHNICAL ANALYSIS:
SPY prices suggest wide-ranging consolidation between the February 2nd highs and the March 2nd lows. The price moves higher on March 2nd and 3rd held daily trend line support, with price nearing the midpoint between the February 2nd and March 2nd levels.
BND prices appear established in a downward trend.
SENTIMENT:
Market participants almost universally dislike the recent rally in equities. Data releases paint a picture of continued inflation and weak corporate profits. People see equity prices increasing and wonder why the disconnect between the data and prices. In situations like this, it is important to remember that data releases are historical and may not represent the future well. Additionally, investors are likely well served to remember that their job is not to predict the future but to understand what futures are possible and to make decisions based on what is known.
ECONOMY AND FUNDAMENTALS:
Last week’s economic analysis holds into this week. Economic indicators within the Market Notebook remain mixed but are skewing towards recession. The key holdout is Jobless Claims. A recession becomes more likely if jobless claims increase. Thus far, claims are not signaling recession. Nonetheless, real economic activity will likely slow over the next few months as the Federal Reserve continues to act to contain inflationary pressures.
NEXT WEEK:
The picture for equities remains mixed. Purchases based on portfolio rebalancing needs or specific opportunities are possible.
Since bonds appear to be in a downward trend, it seems prudent to avoid purchases unless necessary.
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.