In today’s briefing:
- Buy the Dip, or Sell the Dead-Cat Bounce?
- Rethinking the Hindenburg Omen
- 2022: False start for U.S. equities
Buy the Dip, or Sell the Dead-Cat Bounce?
- The U.S. stock market is sufficiently oversold that a relief rally is likely in the short run.
- Intermediate-Term, stock prices are still vulnerable to considerable downside risk.
- The FOMC meeting in the coming week could prove to be a catalyst for volatility and greater clarity on market direction.
Rethinking the Hindenburg Omen
- We are seeing signs of technical deterioration from a variety of sources, such as the Hindenburg Omen and a long-term Wilshire 5000 sell signal.
- Our Trend Asset Allocation Model has been downgraded from risk-on to neutral.
- Investment-Oriented accounts should exercise caution and de-risk their portfolios and shift to a neutral equity weighting position consistent with their investment policy target weights.
2022: False start for U.S. equities
- The year is just started but 2022 has not been good so far for U.S. stocks. The S&P 500, and especially the Nasdaq, are negative YTD, and among the worst indices on a global basis
- Indeed the value rotation is still in place, and the performance gap between value and growth stocks is widening
- I think that the current interest rate increase could be close to the peak
Before it’s here, it’s on Smartkarma
