Market Notebook

Equities moved higher on the week while bonds continued in a downward trend.

Equities managed to hold above a key area of technical support and rallied nicely on the week. From a price action perspective, the last week was critically important in that ticker SPY appeared to break the short-term downward trend and thus could be described as being in a consolidation range. As long as the price holds above the February 24th, 2022 lows, SPY could be considered in consolidation. Given supply chain and inflationary concerns, consolidation is good for now.

Bond prices appear to continue to be influenced by inflationary concerns and the idea that the Federal Reserve may have to hike further, faster, and in a bigger way than previously thought.

The Conference Board’s Leading Economic Index increased in February. Unfortunately, the increase does not consider the effects of the war in Ukraine. It seems likely that the index will contract over the next few months as supply chain issues affect real economic growth in the first half of 2022.

Look for continued volatility in the week ahead. Should the apparent consolidation in SPY continue, specific instruments may begin to look attractive. If risk is taken, remember that it can be limited through position sizing. Be aware that defense is still the name of the game.

All the best.