We can safely say that 2022 has been more dramatic than many would have thought. The S&P500 fell as much as 11.6% since the start of the year. Nasdaq hasn’t done ay better, dropping as far as 20% from January’s opening prices. Both indices have fallen below their 200-day MA. The Volatility Index (VIX) reached a 52-week high of 38.94, rising more than 100% from 17 this year. So, what is in store for the markets?
Is the bottom in?
Yesterday saw a slight change from the recent massacre. First of all, the S&P500 closed green. Volume on the SPY ETF was 250 million, the highest since March 2020. On a good note, this high volume and a green daily close indicates buyers stepping back in. Previous recoveries this year have faded within the day. Buyers were more confident yesterday to re-enter at those levels.
However, I don’t think we see prices cruise up how they did last year after any pullbacks. This morning has seen the price fade once again after open, currently still above yesterdays lows. The price may hold around yesterdays range as it consolidates and finds a balance after this years sell-off.
The other day we wrote about ARK Innovation and their investment strategy. Growth stocks have been a target of selling for some time now. Value stocks have been more favourable among investors. ARK saw volume of over 320% the 50-day average yesterday. This could lead to some support being formed for growth stocks if the market does settle. All-in-all, I am still a backer of value stock to be the safer choice throughout the year but we may see some short-term recovery in growth if the market stabilises.
What to look out for this week
This week has a busy schedule for earnings releases. Some notable names are: IBM, American Express, Microsoft, Tesla, AT&T, Boeing, Nasdaq, MasterCard, Apple, Robinhood, McDonalds and Dow.
The Federal Reserve are also speaking this week. Maybe we see them soften the latest blow that the market has experienced in regard to raising rates.