Fundamental View: Domestic & International Macro Data
Stock market investors have experienced one of the worst starts to a year ever. But now that the markets have shown some glimpses of a possible recovery, investors everywhere are wondering: Have stocks hit bottom, or are we headed towards another cliff?
Investors have been on a rollercoaster over the last few years. During the pandemic, stocks tanked briefly and then kept hitting record highs, buoyed by stimulus money from the government, near-zero interest rates, and a boom in investing. Now, the time of making easy money in the market appears to be over.
One of the major reasons is the result of inflation in an economy is the general slowdown of the economy. When this happens unemployment rates rise, the purchasing power of the consumer decreases and credit becomes expensive. All of these cause a strain on the country’s entire financial system.
To know more about inflation impact one can read our earlier blogs: iQuantsGraph® – Understanding Inflation
In the US The annual inflation rate accelerated above 8% in March and April and currently sits near a 40-year high. Everything from groceries to gas is getting more expensive, and it`s caused headaches for the Fed, not to mention consumers. When assessing what`s next for stock prices, experts are closely monitoring inflation and how the central bank responds to it.
Refers: If we start to see some improving inflation data, that could be the spark that is needed to continue an upcoming rally.
The Fed is trying to cool economic activity with inflation still so high. As long as the current economic picture remains the same, the Fed will maintain this strategy, which will continue to create challenges for the stock market.
Technical View: Is There a Big Fall soon?
Charts normally speakers what can possibly happen. We are trying to Observe based on Leading & Lagging Oscillators along with the Patterns if any.
In Daily time frame: as marked in white lines, Since Jan 2022 market has been falling and taking support near 15700. The market tried twice to reach the same level at the bottom believing unfolding the Double bottom or getting into the triple bottom in the near future. The View is objective as we see from the Oscillators, the fall might be limited and the buyers are emerging across segments. However, Trend Remains weak for the short term and hence should avoid any short-term long position.
Long-term Horizon should use the opportunity to accumulate at each stage step by step and capturing the bottom is highly difficult. One positive news can change the entire trend of the market. Current News which we need to be focused on
1. Russia – Ukraine war closure news if any can change the trend
2. Inflation control news can change the trend
3. Progress in GDP annual growth rate %
Conclusion :
It is difficult for investment professionals who are looking at the market daily to sift through all this uncertainty and make sense of it. And it is going to be even more complicated for the everyday investor to figure out what is happening in the market and what`s the best course of action.
Above all, you want to make sure you have a long-term plan that outlines what you`re trying to accomplish, and that ensures your portfolio is set up to achieve those goals.
A diversified portfolio with a mix of stocks, bonds, and cash that aligns with your goals, financial situation, and risk tolerance is key. Periods of market volatility offer a good chance to revisit your portfolio and make sure it is still sticking to the plan.
