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Weekly Economic and Stock Market Commentary: May 23, 2022

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Weekly Economic and Stock Market Commentary: May 23, 2022Graph of returns to 5/20/22 for Standard and Poor's 500 (SPX) Dow Jones Industrial Average (DJIA) Nasdaq Composite (NASDAQ) and MCI Europe, Asia, Far East (Source: Nasdaq Dorsey Wright)

 

As for the stock market specifically:

Domestic stock markets endured the 8th consecutive weekly decline last week. The one up-day last week was mauled by the bears and declined again the following day. Then there was that wild Friday that saw a great open, tremendous decline, and a late rally back to neutral for the day. The one bright spot is that international markets showed a gain for the week.

The S & P 500 did reach bear market territory midday Friday and then strengthened. I will take that as a good thing.

Money did go to the bond market last week. That raised the prices on bonds and bond mutual funds, which, too have been taking a bath this year.

Believe it or not, last week was a decent week for the bullish percent indicators. In fact, the NYSE bullish percent went back on offense from below the 30 percent level. Given that the markets are below the trend line, and have weak relative strength, I’d be very careful about committing too much money until there is confirmation of demand. Overall, we have a split recommendation of WEALTH ACCUMULATION for the NYSE and WEALTH PRESERVATION for the OTC.

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

Below is where our indicators stand as of May 20, 2022 (Courtesy Dorsey, Wright, and Associates).

Indicator Overview of the NYSE, OTC, and Optionable Bullish Percents

More Data

On a general note: The Department of Commerce announced April retail spending rose 0.9%. That was the fourth consecutive month of increased sales. I will note that retail sales are not adjusted for inflation. Restaurants, bars, clothing, and electronics saw gains, while gasoline purchases declined sharply.

I will close with a report from the National Association of Realtors, which provided us with information on April’s existing-home sales. The trade group stated that April sales fell 2.4% from March, and were 5.9% lower than April 2021. April 2022 was the third consecutive decline in existing home sales. The median home sales price came in at a record $391,200, which is nearly 15 percent higher than April 2021. The average time on the market is 17 days. Also, in April, the inventory listed for sale was at a 2.2-month level. The report did not list an annualized sales rate.

Let’s talk – email me at philip.rongo@ibexwealth.com.