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Whispers of Wall Street – What Our Clients Are Talking About Behind The Scenes

Well, last week was quite the rollercoaster ride with a nearly 5% down move in the S&P 500 from record highs, and then it bounced sharply and recovered nearly 70% of the down move by Friday’s close.  The drivers for the pullback were early week fears of the upcoming inflation data releases that were released on Wednesday and Thursday, which were the CPI and PPI, respectively.  Indeed, both metrics came in well above the Wall Street consensus forecasts and the headlines were filled with stories of surging inflation pressures.  The benchmark fell quite quickly down to the 50-day moving average.  A level where traders would normally consider a key technical analysis support area. 

The combination of both holding above the critical price level and Friday’s Retail Sales data release, which came in softer than expected, helped propel the S&P 500 to strongly end the week.  Over the past 4-6 weeks, I have consistently warned that the U.S. equity markets could experience short bouts of selling pressure as a result of headline macro news.  Importantly, however, I have also suggested that any weakness should be viewed opportunistically as my proprietary investment process continues to signal that the backdrop for stocks remain favorableAs we begin this week, a deep dive into my most important factors clearly shows that they remain favorable for my longstanding investment themes.  With that being said, I reiterate my bullish overall market thesis and based on my proprietary research will keep viewing price moves that are divergent to my medium-term expectations views as chances to take advantage of the tactical price action. 

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