Major Indexes in US markets are unfolding a five wave sequence move from market lows during the past 2 weeks. In fact July was the best month since 2020 for stock market after a free fall of several months that brought major indexes in bear market territory.
There are several factors that support our view , that major Us indexes have seen a medium term bottom :
- Inflation most probably has topped last month.
- Fed rates hake topped too, as Chairman underlined last week in his monthly testimony.
- Fed strategy and view is that inflationary pressures will be around 5% at the end of the year and 2023 will start decreasing.
- The majority of the tech stocks lost 70-95% of their bubble capitalization.
- Two FAANG stocks – META and NFLX – lost 2/3 of their capitalization while APPL 30%.
- NFLX latest results may point a turn around story and an investment opportunity
- MSFT and GOOG issued a positive guidance for the next quarters regarding their vies on profits and Sales.
- AAPL and AMZN proved that quality management can generate money and sales under all macroeconomic conditions, even in a recession.
- AAPL continues to be a favorite growth story for all investors globally.
- SPX unfolded in a 1-2-3 move from pandemic lows and most probably completed a wave 4 . A wave 5 is due .
- Wave structure remained complicated and difficult to name which is a characteristic of 4 waves.
- Overall market sentiment was and still is too pessimistic. Another characteristic of bottoms.
- Economic conditions are still negative and macro environment is challenging for monetary and fiscal authorities, yet bottoms are forming in exactly such places.
To be continued