We have had two very huge developments since final week — two hotter-than-expected inflation experiences…and the S&P 500’s (SPY) response to them says rather a lot about the place we’re proper now when it comes to the continuing bull/bear tug-o-war sport. Hold studying to seek out out what it is saying….
(Please get pleasure from this up to date model of my weekly commentary initially printed February 16th, 2023 within the POWR Shares Underneath $10 e-newsletter).
Market Commentary
On Tuesday, we bought the most recent month-to-month Shopper Value Index (CPI) report from the Bureau of Labor Statistics.
The report confirmed costs rose 0.5% month to month and are up 6.4% previously 12 months. Each of these numbers have been larger than most economists anticipated.
After buyers spent 2022 shopping for and panic promoting on inflation-related information, it appeared like a positive factor that we would get large promoting… on each days, however Tuesday ended up flat (with the Nasdaq index really up), and all three main indices have nearly absolutely recovered their losses from this morning.
Then, this morning, we bought the January Producer Value Index (PPI) report. Once more, PPI confirmed costs growing (at a fee of 0.7% month over month), which was sooner than the 0.4% fee economists predicted.
It seemed like we have been going to get a repeat of Tuesday, with shares falling on the information after which recovering their losses earlier than the shut.
After which, within the final hour of buying and selling, the market tumbled once more. Ultimately, the S&P 500 (SPY) closed down 1.4%. The Nasdaq closed down 1.8%.
So, what is the deal?
It felt like Tuesday’s outcomes have been already considerably baked into market costs. In actual fact, on Tuesday, I wrote…
Everyone knows by this level that inflation isn’t going to easily drop in a straight line over the following few months, however inflation remains to be down considerably from its peak. Traders seem to have come round to the concept that the Fed in all probability will not decrease rates of interest in 2023 — one thing Fed Chair Jerome Powell has been saying for months.
And even so, buyers have not bought off all their holdings in a panic.
In different phrases, the bulls are successful this spherical of tug-o-war, and buyers are “danger on,” shopping for up shares that have been beforehand deemed “too risky” and “poor investments for a high-rate atmosphere.”
However issues have been a bit totally different at present… and that is as a result of we had the addition of two Fed officers saying they’d thought of the potential of 50-bps hikes. That, plus a second scorching inflation studying, appeared to place a chill on all of the shopping for.
Now, even with the end-of-day promoting, the S&P 500 remains to be sitting round 4,100, which is our necessary help/resistance degree.
The index’s skill to remain above this land might probably imply the bull rally remains to be on. If it falls under, then we might see a major dip decrease.
As a result of the market reversed so all of a sudden on the finish of the day, it is onerous to know what the market sentiment might be going ahead. I am trying ahead to see what tomorrow brings.
Conclusion
This might be a tough spherical for the bulls to win, but when they do, it might be the beginning of a powerful leg larger.
And if the bears come out forward, we’re nonetheless defending ourselves with promote commerce triggers and by taking our features whereas they’re nonetheless fairly worthwhile.
What To Do Subsequent?
If you would like to see extra prime shares underneath $10, then you need to try our free particular report:
3 Shares to DOUBLE This 12 months
What offers these shares the appropriate stuff to turn into huge winners, even on this brutal inventory market?
First, as a result of they’re all low priced firms with probably the most upside potential in at present’s risky markets.
However much more necessary, is that they’re all prime Purchase rated shares in keeping with our coveted POWR Scores system and so they excel in key areas of development, sentiment and momentum.
Click on under now to see these 3 thrilling shares which might double or extra within the 12 months forward.
3 Shares to DOUBLE This 12 months
All of the Finest!
Meredith Margrave
Chief Progress Strategist, StockNews
Editor, POWR Shares Underneath $10 E-newsletter
SPY shares closed at $407.26 on Friday, down $-1.02 (-0.25%). 12 months-to-date, SPY has gained 6.49%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.
In regards to the Writer: Meredith Margrave
Meredith Margrave has been a famous monetary knowledgeable and market commentator for the previous 20 years. She is presently the Editor of the POWR Progress and POWR Shares Underneath $10 newsletters. Be taught extra about Meredith’s background, together with hyperlinks to her most up-to-date articles.
The put up Bulls Vs. Bears Tug of Battle appeared first on StockNews.com
