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Weekly Economic and Stock Market Commentary: June 6, 2022


Weekly Economic and Stock Market Commentary: June 6, 2022

As for the stock market specifically:

Stocks returned to their losing ways last week, despite the seemingly good news on the economic front. That provided yet another example to my list of evidence that the economy and stock market are not necessarily correlated with each other. For some reason, it seemed as if last week was a good week for the markets, but, alas, it was not.

There was some positive news last week. On a number of days last week, the markets fell early in the day and rallied to close at or near the high of the day. Since I am NOT in the prediction business, it is too early to say if we are at the bottom.

The back-and-forth last week resulted in better readings for the bullish percent indicators I use to manage risk. Since we still have negative trends on the major market averages, and relative strength favors “other than stocks,” I’d be very careful with any new purchases at this time. To bring a light of hope, one of my longer-term indicators, the percentage of stocks in the S&P 500 has regained strength and returned to a column of X’s. With all this said, and given the state of our intermediate-term indicators WEALTH ACCUMULATION shall continue, but be careful.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of June 3, 2022 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor had the only economic report worth a comment. They announced the US economy added 390,000 jobs in May. The unemployment rate remained steady at 3.6%. Revisions to March and April numbers resulted in fewer added jobs than reported previously. The labor participation rate rose to 62.3% during May but remains below the 63.4% level of February 2020. Wages were 5.2% higher in May 2022 compared to May 2021, while the April comparison would be wage increases of 5.5%.

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