If you’re looking for sage advice about what comes next in the markets, move along. This thing is in a precarious spot.
On the one hand, economic activity seems to be (at least on paper) hangin’ in there. Employers still can’t seem to find employees. So inflation remains, despite the Fed’s attempt to quash it.
This creates quite a conundrum for the stock markets. On one hand, it appears earnings growth is still happening. On the other, rising rates are expected to ding the economy.
So which is it?
Even the markets don’t seem to know yet.
Last week was a rough one, with indexes dropping anywhere from 2-to-3 percent-ish points. Do we continue this week?
Short answer: maybe.
A lot of sentiment seems to be getting washed out fast. The previous FOMO (fear of missing out) rally has quickly switched to how-much-worse-might-this-get thinking.
With a lot of the frenzied buying coming out of this market, it’s tough to say whether this looks like a buying opportunity, of if there is more downside.
Looking at areas of interest, the 200-dma for the SPX is sitting at roughly 3940. There were also a few other points of interest at 3900 and 3864. If support fails at these, it’s likely the markets are headed lower… perhaps significantly lower.
This week could be an interesting tell…
Here are the charts: