As the market works to discount the potential impact of high inflation, Putin’s invasion of Ukraine and higher interest rates, something surprising is happening.
It’s not as if there isn’t plenty to worry about for investors these days.
For instance, there’s the highest inflation rate in 40 years to consider. Then there’s a Federal Reserve that is turning more hawkish by the day. And, oh yes, there’s the first major land war on the European continent in 75 years.
But against that backdrop, the Action Alerts Investment team is seeing something unexpected happen.
“We’re not out of the woods yet, but hopefully there will be more clarity in the coming weeks” AAP wrote in the wake of last week’s rally. “Clarity could mean a return to more normalized market conditions, allowing the fundamentals and technicals to once again be the guiding path for stocks.”
To be sure, “the technicals point to the market being overbought, which confirms the notion this week was a relief rally,” the team noted. They Added that major indexes”clawed back some of the year-to-date losses, but pronounced moves like this tend to result in overdone market conditions in the near-term.”
Still, the technical chart of the S&P 500 is clearly in a much better place these days than it was a month ago, at least if you are a bull.
“If you look at the recent lows around 4120-4130 on the S&P 500 … there is a case for a bottom at that level, and it would embolden the case for the bulls to create a new uptrend. What would that look like? A series of higher lows, higher highs,” according to AAP.
