“Recession fears are the most likely trigger of a retest of the June lows,” said Ed Clissold, chief U.S. strategist at Ned Davis Research, in an Aug. 31 note. “From a seasonality perspective, a retest could come in the next several weeks.”
Vanguard Group said in a Sept. 1 report that it downgraded its forecast for U.S. economic growth this year after two straight quarters of contraction. The firm now expects economic growth of 0.25%–0.75% for full-year 2022, down from its estimate last month of about 1.5%. “The average non-recession bear lasts about seven months and has declined 25% , putting the January – June drop in line with the typical case,” Clissold wrote in the Ned Davis note. “Conversely, the average recession bear has lasted about a year and declined a mean of 35%.”
The “vigorous” rally in stocks seen earlier over the summer had reflected “too much optimism given we’re still in the early stages of fighting inflation,” said Crossmark’s Doll. Although he thinks inflation has peaked, Doll predicts that its continued decline this year will likely be irregular and finish 2022 above the Fed’s 2% target.
Ahead of Powell’s Jackson Hole speech, the market narrative had switched away from the Fed fighting inflation through aggressive rate hikes to, “when are they going to pivot?” said Steve Sosnick, chief strategist at Interactive Brokers. But using a relatively short speech, which had “no ambiguity,” Powell turned the focus back to monetary tightening and the Fed’s unfinished fight with inflation, sending “a very powerful message to the market,” said Sosnick.
But intermediate-term and long-term breadth needed to follow to confirm a bull market, he said, and without that confirmation, “a retest cannot be ruled out.”
jbegno1 Petróleo subiendo con fuerza... Y ya sabemos como le sienta eso al mercado USA en general. De hecho la semana pasada fue mala para Oil & Gas y ni aún así fue el SP capaz de romper la tendencia bajista de corto plazo. Y unos cuantos Drillers rompiendo en la sesión del viernes.
Market has BROKEN ever rule in n the history book so I’m prepared either way. Just glad I’m up and will be tax planning 2022 and seeing what may recover in 2023.
TradesTrey Oh look, Composite Man
Get ready for a Dark October
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