Weak market and the reasons
The S&P 500 fell below the 4200 points support this week. I didn’t expect that but well, anything is possible on the stock market, even the opposite. But we come back to that later. The Index lost more than 100 points which was about -2% and we closed at 4117 points on friday.
The reasons behind remain the same: ongoing inflation and the high interest rates that make stocks unattractive vs bonds, that offer yields of about 5% if you go for a 10y US treasury. Especially for Tech and growth companies high interest rates make credits to develop their business more expensive.
In addition we have a war in Ukraine and the conflict in Israel. To make ends meet there is an ongoing earnings season that is rather disappointing so far with quite a lot of tech companies with mixed numbers like Alphabet or Meta this week.
Investor Sentiment very low
If you are reading all this you can get the impression that the sentiment is low. That is correct, in fact we are within the field of extreme fear right now. Almost everybody is expecting more bad news and a further declining stock market. Well that could happen, the next bigger support for the S&P lies at around 3850 points. That is a downwards potential of another -7%. Doesn’t sound good does it?
There is hope
Well you know me guys, don’t you? There is always some positive about it, some hope. In this case I want to come back to the famous investor saying I already stated above:
Anything is possible on the stock market, even the opposite.
If everbody is thinking in one direction, downwards, if everyone is expecting things to get worse, well there is a good chance that a little bit of the opposite could turn the situation around. Almost everybody is selling these days, buyers seem to be more scarce than Bitcoin. But this is a chance and often the point where new optimism can arise once we get at least some good news.
I am not saying we will turnaround next week, no one knows when and if. But I an saying that in the middle of the night lies the beginning of a new day. Let’s wait when we will see it dawning at Wallstreet.
How is your feeling about the stock market right now?
