We have an interesting market situation. There was a 10% correction from the market peaked out end of January. We got a real bounce where we regained most of the ground lost in February.
The market drop started as soon as the heavyweights the FAANG had come with earnings. As we have had a 2 year winning streak the market was more than mature for a little correction. As I have pointed out earlier we can get corrections in the end of earnings season. Is this the case this time around as well.
What everybody wonder now is what next? The pattern above is a traditonal correction ending in a bounce market pattern. Hope most of you made use of the 10% bounce.
Is this a short term correction or is it part of a bigger market movement. Myself I have always used the outlook for the overall economy as my main contribution to market analysis. What does the outlook for the economy look like in the time ahead. Stock markets tend to run under good economical conditions.
This the Nasdaq 3 year chart. This to show you the positive long term market trend. The late correction just a minor setback as you can see. This illustration gives no reason to become pessimistic. The overall economical outlook still positive.
Is there any reason for some kind of concern? As we all know we have had a great multiyear bull market. No wonder the small correction, which some will say nearly overdue. My answer is to believe in your subjective odds for your overall economical outlook. That is your belief in the development of GDP growth and perhaps outlook of the housing market.
I have to say I share the views of the FED Chair Jerome Powell. A good US economical outlook. Hence the ratehikes. That said always uncertainty with markets. A good strategy is the one I set forward in my US Election blogs. Follow the market direction as it commences, even when you have a positive market bias.
I have given you an earnings season framework to use in your market analysis. Next quarter starting April 1. Look for the earnings season rally and if we will have one quarter 2. Never any good reasons to hurry into investments, patience the name of the game.