In today’s briefing:
- Fearful, but Not Panicked
- Peak Fed Tightening Anxiety?
Fearful, but Not Panicked
- While fear levels are elevated, the market is neither panicked nor oversold, indicating there may still be unfinished business to the downside once the market bounce is over.
- The best-case scenario will see a S&P 500 relief rally that tests 50-dma resistance once geopolitical tensions fade.
- The worst-case scenario is a break of neckline support at about 4300–4330 of a possible head and shoulders pattern, with a measured downside objective of about 3800.
Peak Fed Tightening Anxiety?
- We believe the market psychology is nearing peak inflation hysteria and both inflation pressures and the economy will fall in the coming months.
- We are reiterating our recommendation to be cautious in equity positioning with an overweight on defensive sectors and high-quality stocks.
- Begin to accumulate positions in large-cap high-quality growth stocks. When the narrative pivots from strong inflation to slowing GDP, FANG+ stocks are likely to catch a bid.
Before it’s here, it’s on Smartkarma
