Past week recap: Another volatile week that ended with large gains in the major indexes, creating a two week “rally”, which could indicate the previous large market decline was contrived. However, this week’s gain came after the Fed meeting which confirmed their intention for larger and more interest rate increases ahead to counter expected inflation – the very news that supposedly caused the recent market decline. So, which trading behavior is genuine? Selling, because rising interest rates will put the brakes on our thriving economy? Or buying because planned rate increases will not significantly slow our thriving economy?
Market action suggests there is no consensus among institutional investors, and that is not a good thing – as long as there are opposing viewpoints, short-term volatility in the stock market will remain high, making conditions challenging for us to string together many smooth, enduring gains long or short.
Already seeing evidence of these opposing behaviors among our stocks – both new weekly highs/lows and large gainers are fewer than normal. Results are a mix of some long positions resuming uptrends, others sagging, some short positions continuing to decline, others swept up momentarily in the upward market bias, which constrain our overall profits.
Periods of uncertainty among institutional investors like this occur every year; requiring us to be patient until greater consensus takes hold.
Highlights: 4 new weekly highs in long positions. 7 stocks with double-digit long gains:
- LPSN +14%
- EVTC +21%
- FTK +30%
- BXC +61%
- URBN +71%
- PES +18%
- LQDT +22%
4 new weekly lows among short positions. 1 stock with double-digit short gain:
- GLMD +44%