We got our sudden upward rally that analytics hinted at the prior week, the first week in months in which stock prices rose just about every day of the week.
Not sure if this means the bottom of the recent stock market downtrend occurred the prior week, but many market technicians think so.
Why the sudden rally? After all, inflation remains strong and recession intact. The only two reasons mentioned by analysts were Fed comments suggesting interest rate increases may be coming to an end sooner than later (end of this year), and the latest corporate earnings reports have generally been better than expected.
Could a third reason be institutional investors expecting a big relief rally from a “red wave” midterm election outcome and thus they’re taking long positions now in advance?
Beginning to see more of our stocks rise in price – diminishing our short gains and either increasing our long gains or at least lessening the losses on them. Seeing some new weekly highs – a rarity in recent months. Also seeing some trades to act on this week.
A few issues could hamper a continued rally next week – notably a shortage of diesel fuel for trucks/trains becoming more problematic and the unresolved railroad worker negotiations could reignite a strike situation – either of which could cripple transport and thus harm the U.S. economy.
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