Stocks-Bulls vs Bears-The Big Question is Who Wins the Fight in Q2? Must Read!
April 1 2022 Option Professor Opinions & Observations
Well in Q1 both Bulls & Bears could lay claim to some victory as the Bears saw the SPX do a nice a nice tank job from 4800 to 4100 (15% drop) and finished down for the quarter BUT the Bulls took solace in a positive March and a face ripper rally from Mid March! Positioning and a slow on the uptake Fed (why are they not hiking intra meeting when the 2 yr Treasury is already at 2.5%??). It remind me of why there was not pre-emptive action taken in Ukraine when Russia put 100,000 troops around their border weeks if not months before invasion?? Outside our expertise & pay grade but…
Earnings season is dead ahead and we expect a spotty season potentially and that is because of yields rising, inflation, demand pull forward, margins pinched, no IPO’s or SPACS ergo no huge profit center plus a market drop. If you come out bad (RH) you’ll get whacked and if you come out good (LULU) you may rally but roll over afterwards. The shipping numbers got dodgy this week and the Transports fell out of bed big time. If we can clear SPX 4630 area; we could take a shot at the highs of 4700-4800 setting up a reverse head and shoulders BUT if we take out SPX 4500 a move to even further support of SPX 4400 may be probable. The oversold metrics have reversed to an extent–we need new tailwinds
April is historically a good month but Inflation, Fed talk, War, Valuations, potential margin pressure may be headwinds. Should we see a .3% to .5%+ move up in the Jobless rate…recession may follow…certainly not discounted in prices. When we hear people opine on soft landing or hard landing of the economy.. we tend to ask…Do we even have a pilot? Let’s see if tech, biotech, innovation can rally or if it’s back to energy, metals, dividends, value, utilities, staples & banks. We view Key SPX levels this week including RESISTANCE at 4680-4750-4810 and SUPPORT at 4510-4410-4160 areas. Money is out there and rates are still negative after inflation….both bullish…climb the wall of worry or bear market rally?
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