by Robert Holman | www.DefensiveAdvisor.com
STOCK MARKET (BIG-PICTURE) RATING … 5.0 (1-4 bearish, 5 neutral, 6-9 bullish). No change – seems like every up day is offset by a down day. Have patience. The market is still cautious due to uncertainty surrounding the severity and timing of a possible recession. Recently, deflation in China is bringing out new investor worries.
After 13 up days in a row (which after a down day extended to 16 of 17 up days in a row) the market has been down 6 of the last 10 days (net down is about 600 points). We need to be patient and see what the trading action of the next month brings us. But, the US stock market is definitely showing signs of a blow-off and subsequent cooling.
An equity strategist at Stifel Nicholas last Wednesday said he believes this year's rally has run its course. Take note: He correctly anticipated the 2023 rally earlier this year (spurred by his belief that the US recession would not arrive in 2023) when all other strategists at that time were looking for the market to move even lower.
He now expects the S&P 500 to trade sideways for the rest of the year, finishing at or near 4400, roughly 50 points lower than where we are right now.
<By the way, there are ways to make money in that type of market.>
If a recession or no-growth economy arrives in 2024, he said, continued high oil prices will likely make it impossible for the Fed to cut rates to stimulate the forecast sluggish economy.
Also on Wednesday, President Biden said he wants to stop all domestic oil and gas drilling.
China reported deflation in it’s inflation index, which may lead to stimulative government intervention.
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