Market Notebook

PRICE ACTION:
Equity prices, as measured by ticker symbol SPY, and bond prices, as measured by ticker symbol BND, closed higher on the week.

ECONOMY AND FUNDAMENTALS:
Last week’s price action suggests a “Fear Of Missing Out” or FOMO sentiment among equity and bond investors. Strong price gains in the face of uncertain economic data suggest market participants did not want to be left on the shore as the equity and bond ships set sail. While these moves are positive, beware that such strong moves could lead to near-term volatility.

From a fundamental standpoint, earnings season has been a bit of a mixed bag. There were definite winners and losers. Generally speaking, forward guidance provided by management has been cautious. Indeed, the impact inflation and higher rates will have on corporate profits remains to be seen.

TECHNICAL ANALYSIS:
From a technical analysis standpoint, equities and bonds appeared to be in a continued upward trend. If SPY prices continue higher, there is an overhead area of price resistance around the $420 area. Even with potential overhead resistance, the upward-trending nature of both equities and bonds leaves the door open for purchases during the coming week. Beware overhead resistance if planning tactical purchases.

NEXT WEEK:
During the coming week, be on the lookout for volatility and perhaps a bit of “buyer’s remorse” as equity and bond investors evaluate the current investment landscape. As mentioned above, the door remains open for purchases based on technical analysis cues.

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.