Who Wins the Stock Market Tug of War?
Last week, we noted some signs that the market could be ready to move lower. Between last Wednesday and Monday’s low, the S&P 500 (SPY) declined by 3.5%. Over the last couple of days, we’ve bounced back and made up the bulk of these losses. As noted in previous commentaries, there’s a tug of war going on between the various bullish and bearish forces in the market. On the bearish side, we have a market with weak breadth, concerns about the Delta variant, and signs that growth may have peaked. On the bullish side, we have low rates, an expanding economy, and expectations of more earnings growth over the next 12 months. So far, this earnings season is also coming in quite strong, although some companies have issued outlooks that were below expectations. In this week’s commentary, we will preview earnings and update our market outlook. Read on below to find out more….(Please enjoy this updated version of my weekly commentary from the POWR Growth newsletter).
Let’s start off by looking at an hourly chart of the S&P 500 over the past month. Clearly, the market has been putting in a strong bounce off the Monday lows and has recovered about 2/3 of its losses.
During our webinar and previous commentaries, we talked about how this could take the shape of a correction or another garden-variety dip.
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