The Good News, Bad News Cycle Continues

The data affecting the stock market these days is a mixed bag of dire reports amid optimistic predictions. This week in our Learning Markets livestream, we’re breaking down how to sort out all the information to help you make the most informed decisions about your portfolio, including optimal times to add risk.

A surprisingly good Consumer Price Index report last week had stocks on the move. Mid-August is typically not a time when we see the market making big moves, so we’re not sure this is a legitimate break in resistance. This week on the livestream, we explore how high stocks could go, and we answer lots of viewer questions.

The yield on the 10-year Treasury bond is a factor we like to examine when looking into the market’s crystal ball. Inflation decreased last week, which likely means the Fed will be less aggressive on raising rates, so longer-term interest rates also should go down. That’s one of the positive aspects keeping the market afloat these days.

The media threw around several numbers for the favorable CPI report that came out last week, which may have been confusing for some investors. In the livestream, we broke those numbers down using the core CPI report, which excludes food and energy. We found that inflation is still in play, but the sluggish month-over-month increases may mean it’s slowing down. We’ll have a better idea in the coming months of how inflation will play out. In the meantime, we still like the retail and tech sectors of the market.

The negative economic data we’re dealing with to start the week is out of China, where reports released Sunday evening (in North America) indicated that industrial production – expected to be at 4.5% or so — is up only 3.8% year-over-year. The S&P reacted negatively in the energy sector and continued to do so Monday as the National Association of Home Builders released its monthly sentiment survey. Home builds and buys are down, which should not bode well for construction stocks.

Another similar survey, the Empire Manufacturing Report, was also dismal. Yet once again, the market reacted favorably. In Monday’s video, we explore where support is and where investors should look for opportunities.

Viewer Questions and Feedback

We answered some specific viewer questions this week and would be happy to address yours in a future broadcast. Just drop a line in the comments section or email us at feedback@investorplace.com.

Here are just a few we discussed:

  • Could you provide a price target for Enphase (ENPH)? — Uli W.
  • Could you explain how you arrive at your worst-case estimate for Coinbase COIN ($20 by the end of the year)? – Eric L.
  • Is the quantitative tightening tapering postponed in May going ahead or being postponed again? — Mark P.
  • So if I have ExxonMobil, ConocoPhillips, Kinder Morgan, and other [energy stocks], should I sell back a percentage and look to buy at another date? — Ed P.
  • What do copper futures look like, in your opinion? – John C.
  • Could you go into a little more detail as to why you think 3,700 is strong support for the S&P 500? – Jennifer H.

Only have a few minutes? Check out our shorts this week, where we address everything from meme stocks to oil.

If you have any questions yourself about options trading, specific stocks or bonds, or market trends in general, we’re happy to answer them. Just email feedback@investorplace.com or drop us a line in the video comments.

Sincerely,

John Jagerson and Wade Hansen
Editors, Trading Opportunities

 


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