Chop Chop Chop
The stock market has been a choppy, range-bound mess lately, leaving both bulls and bears frustrated. Looking at the Nasdaq, we can see that it has been difficult for either side to gain any meaningful traction. Despite the market's increase in price, we have yet to see a streak of net highs; instead, we continue to see net lows, indicating that the indexes and their skewed weightings are masking weakness. Mega-cap stocks like Apple, Google, and Microsoft are responsible for most of the advance. However, despite this, there are still some stocks that are basing and acting well.
If the market is going to make any meaningful progress, we will need to see breadth continue to broaden out, and we will need to see the price take out this early February peak.
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While inflation has been the market's primary concern for most of the last year, we are starting to see signs that inflation has peaked. On Wednesday, we had the CPI report, which came in pretty much in line with expectations. However, Thursday's PPI report, which is the Producer Price Index, came in well below expectations. This is often seen as a leading indicator to CPI since producers pass on those inflationary costs to the consumer.
So now, the question is whether or not the market is going to be concerned about recession risk or if that is already priced in.
To see which stocks have been displaying relative strength and have the potential to be the next big winners watch the video below.
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The content presented is for informational and educational purposes only. Nothing contained in this newsletter should be construed as financial advice or a recommendation to buy or sell any security. Please do your own due diligence or contact a licensed financial advisor as participating in the financial markets involves risk.