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12:00 TUESDAY – Stock Market Report #165 – 5/10/22

by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com


EQUITY MARKET RATING… 4.0 (0-4 bearish, 5 neutral, 6-10 bullish). The DJIA has been down the last 6 weeks in a row.


Last week, the DJIA finally was up 3 days in a row, but remember my projection, that “we could soon have a week or two where the market goes up consistently, maybe 7-8 out of 10 days” --- one week later, that seems unlikely, but the best chance for a rally this week would be a strongly favorable CPI inflation rate when it is released this Wednesday. Remember my warning, that: “the chances of my being wrong on this are around 80% - it’s way too specific, and no one can predict the future like this”.


EQUITY MARKETS and the ECONOMY … The volatility index (VIX) is near 35 - past a point at which it has rallied in the recent past. “Advance” quarterly economic growth released April 28 revealed a surprising <1.4%> slowdown - but this number is subject to meaningful revision. April manufacturing, services, and employment were not good numbers, but consumer confidence and sentiment are holding up and the Core PCE Deflator (inflation measure) moderated slightly after rising for 6 straight months (but it takes three months to make a trend).


The Fed will still increase rates another 50bp (1/2 of 1 percent) in June to catch up to inflation and bond market rates. However, a lower PCE report in late May or June may lead the Fed to increase rates by only 25bp (1/4 of 1%) in July or August and the following months. That could be great for stock prices, and it might lead to a fall/winter market rally.


But if poor trends in GDP or retail sales or new job creation offset that possibly moderating PCE, we could see a period of stagnant growth and persistent inflation (stagflation). That would be very bad for stock prices. Keep an eye on these statistics as we move forward - in my opinion, they will be the key drivers of the market.


INFLATION … the CPI to be released Wednesday this week will be a market moving number.


PORTFOLIOS … After reading this material, if you are unsure what to do with your portfolio, call me to discuss your circumstances and I’ll explain what ought to be done to help your situation. Just click here, and I’ll be happy to give you a complimentary portfolio evaluation along with a recommendation for two stocks to put into your portfolio.


I’ll also explain what’s good about your portfolio, how it’s likely to perform in upcoming months, and give you a couple of ideas for improvement, all at no cost to you.


Alternatively, you may contact me by calling 972-702-6032, and I’ll give you a way to securely email your portfolio holdings to me and I will input the data for the evaluation report.


TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018, and are doing better than the market return over the same time.



Published every Tuesday at 12:00 noon. For more information on my investment and planning services, or to sign-up for this weekly e-Newsletter, visit my website: http://www.defensiveadvisor.com/services OR http://www.defensiveadvisor.com/contact


Opinions voiced in this post are for general information only and are not intended to provide specific advice to or recommendations for any individual, without complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.

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