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Technical Update to Markets

Over 50% of S&P 500 companies reported their first-quarter earnings. It appears that many have beat their estimates. One would expect the market would rally off of these positive earnings. However, investors remain overwhelmingly bearish, punishing companies that have missed their top-or-bottom lines or have reported less than robust full-year forecasts. Even stocks that reported favorable earnings and successfully negotiated inflation and the war in Ukraine are not rallying.


The bears have blamed the poor performance in stocks on the hawkish comments from Chairman Powell and the Federal Reserve. Powell has hinted at a 50-basis-point hike in the next FOMC meeting in early May. The narrative has many postulating a Fed policy mistake may lead to an economic recession.


The bulls believe the selloff in stocks is overdone. They point to the favorable corporate earnings, the resilient economy, and the subsiding of inflation pressures later in the year.


Whether you side with the bulls or the bears, another 250 S&P 500 companies will report their first-quarter earnings in the days and weeks ahead. Based on the current reactions, it is likely that markets will remain volatile and erratic over the near term.


Below is another technical update of the S&P 500 Index, Dow Jones Industrial Average, and Nasdaq Composite Index.


Complex head and shoulders tops, rounding tops, broadening tops, and megaphone patterns are visible in broad and narrow-based indexes and individual stocks. Although these patterns are still developing, it is increasingly important for investors and traders to remain focused.


Achieving financial success is not how well you can trade or invest but whether you have an appropriate and well-established investment game plan. A disciplined risk management strategy remains an intricate part of any successful investment strategy for wealth creation and preservation.


Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

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