An Indecisive Market

PUBLISHED Feb 6, 2022, 1:42:25 AM        SHARE

imgTom Hamilton

A close above 14532 would be a bullish sign, but there is also a case to be made for a retest of the lows at 13097 and a ‘W’ type bottom. Volume is light and that confirms the “No Commitment” side of this market. We’ve had good economic news, earnings are mixed and it looks like the markets are factoring in multiple interest rate increases over the coming year. So what gives?

Well markets don’t like not knowing what’s ahead. Color that Ukraine, but mostly it’s about profits this year. Inflation is up, commodities are up and wages are trending up . . . this puts the squeeze on profits and that’s the concern. The coming week will have two big impacts on the market. First Wednesday is a Treasury bond auction. Are investors (worldwide) concerned and bid prices higher (lower bond prices) or will they demand higher interest rates? Then on Thursday we’ll get another inflation report and that could spook the market.

I haven’t shown the health of the stocks in the broad S&P 1500 Index for a while. The pie chart shows the number of stocks in relation to their 20 day moving average and where they are in relation to the standard deviation (a.k.a. volatility) from the mean.

More discussion at: (chart from High Growth Stock Investor; used with permission)

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