June 9, 2022
By Scott Wohlers
The S&P 500 is up 8% since its May 19th low. Many higher growing companies bottomed earlier, around May 11, and are up even more. Recently, about 64% of stocks have seen positive cash flows. Insiders have been buying and most pundits are negative, a good contrary indicator. In addition to being oversold in May, this market has been set up for a rally phase.
The question now is, will it continue? The Bull and his partners believe it will. Inflation is still the biggest concern. If it has topped out, then that will be added relief for investors. There is anecdotal evidence to support that assumption. Housing sales are slowing. Car inventories on dealer lots are increasing, and the consumer is being more selective in when and where they spend. Suddenly, some companies find they have too much capacity and inventory in some categories.
Inflation has been driving Federal Reserve policy. If it moderates, then policy may not need to go to the extremes that many investors fear. Interest rates may top out at lower levels than have been forecasted. Growth concerns will come back into play and market leadership may shift from value back to growth. That may already be happening as growth has recently been outperforming the value sectors. We’ll see; stay steady my friends.
The Lonely Bull
