Market Notebook

Both US equity and bond prices closed lower last week.

The negative sentiment in equities appears to be the result of concerns regarding the potential for lower growth in the near term and data suggesting a continued, highly inflationary environment. Anecdotally some companies have seen consumers react negatively to higher prices of goods and services. Additionally, the federal reserve appears to be on track for a 50 basis point hike in the near term.

From a technical analysis standpoint, and as measured by ticker SPY, US equities appear to be in a wide area of consolidation marked on the lower bound by the lows set on February 24. Unfortunately, US equities did not hold key support levels last week, closing below the 200-day moving average and 20-day exponential moving average. This clears the way for a potential retest of the February 24 lows.

Given that the technical backdrop for equities is bearish, purchases of equities should likely be limited to necessary portfolio transactions or equities considered to be exceptional or time-sensitive opportunities.

The story in bonds has been a complete broken record for the last few weeks. Bonds remain in what can be considered a technical downward trend. Prudence suggests that one steer clear of purchasing bonds unless necessary.

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.