April 25, 2022
Good morning,
Wow, that was a bit rough – Friday made for a bad week. The S&P 500 was off -2.77% Friday, it was down 2.75% for the week. Before Friday, one might have been impressed with the market action year-to-date, given all the bad news this year and the gloomy investor psychology. While one-day does not a market make, Friday was an 11-to-1 down day and closed slammed the door on any hope of the tape resuming its upward trend any time soon.
Historically, the market goes sideways about one third of the time, and it is usually when the trend component (the tape) of technical/quantitative analysis is neutral, that you’ll find these trading range markets. Within the context of neutral, I suspect the market will test the lows set back in February in the 4100-4150 range on the S&P 500. That’s about 3% away from Friday’s close.
On a short-term positive note, bond yields are down about 10bps across the whole Treasury complex this morning, and Futures are off less the half (-.50%) from their worst levels overnight. Days like Friday are emotionally impactful, but no real damage was done to the neutral narrative.
Be well,
Mike