Bullish or Bearish… You decide | businessupdates.org

by Ana Lopez

There is a lot of bearish energy right now. Even the Fed seems to be calling for a recession… and the pundits who aren’t worried about a recession are worried about stagflation. (For anyone a few years away from Econ 101, that’s the one where we have sticky high inflation AND rising unemployment.) And yet a quick glance at the stock market would have you thinking happy times are upon us again. Which side is right? Read on to discover my choice….

(Enjoy this updated version of my weekly commentary originally published April 13e2023 in the POWR Shares Under $10 Newsletter).

Let’s go through a few reasons why people are bearish.

– Banking chaos + tighter credit could lead to a sharp drop in economic activity in the US
– Unemployment is getting worse rather than better
– Potential for higher interest rates as the next Fed meeting approaches
– Probable drop in earnings growth in the first quarter
– Stocks largely trade at high multiples
– We are still not back to the October lows
– Inflation is still more than double the Fed’s target rate

And here are a few reasons why people are bullish.

– Because everyone else is bearish

Now, I’m kidding, but I’m also kind of not.

Yes, there are some technical indicators that are bullish – like the fact that the S&P 500 is above 4,100 and looks about to break above 4,200, which would be the start of a new bull market.

There are also a large number of investors looking ahead to a time when the Federal Reserve pauses its rate hike strategy, which should soon be based on their initial target rate.

And there is certainly some truth to the idea that when everyone else is bearish, the market turns bullish.

Once everyone and their dog have sold all of their stock… and there are no more sellers in the market… that means the only direction the market can go is up. (Or sideways.) It’s the whole reason contrarian investing is a strategy.

And speaking of the Fed, even they are bearish… and they are the ones orchestrating this whole thing.

According to the minutes of the Fed’s March meeting, “Given their assessment of the potential economic impact of recent developments in the banking sector, staff projections at the March meeting included a mild recession that began later this year. , with a recovery over the next two years.”

That usually doesn’t bode well for stocks. But look how well things turned out for the bears in Q1. After some chopping, the S&P 500 (SPY) and Nasdaq managed to overcome the naysayers and make a profit.

Personally, I’m still more bearish than bullish, which I know seems to be the popular choice.

But I’m still a big believer in our “market of stocks” strategy, which looks for solid companies that are ready to make a profit no matter what the market does.

In fact, aside from major changes, I have a few more choices for you tomorrow.

Conclusion

We will continue to buy cautiously for now. We don’t want to look back until the end of this year at all the gains we could have missed while sitting on the sidelines waiting for the perfect opportunity to come in.

But we are going to keep an eye on bearish action/fundamentals to make sure we don’t get torn apart.

What to do now?

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All the best!

Meredith Margrave
Chief Growth Strategist, StockNews
Editor, POWR Newsletter Stocks Under $10


SPY shares closed Friday at $412.46, down $1.01 (-0.24%). Year-to-date, SPY has gained 8.26% versus a percentage increase of the benchmark S&P 500 index over the same period.


About the author: Meredith Margrave

Meredith Margrave has been a well-known financial expert and market commentator for the past two decades. She is currently the editor of the POWR growth And POWR shares under $10 newsletters. Learn more about Meredith’s background, along with links to her most recent articles.

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