The S&P 500, NASDAQ-100 Index, and Dow Jones Industrial Average continue to reach new heights. However, investors should prepare for potential market volatility as not all stocks follow the same trend.
Andy Puzder, former CEO of CKE Restaurants, offers valuable insights on wage impacts and restaurant pricing amid signs of slowing inflation. The growing gap between fiscal and monetary policies is causing unease among economists. The National Association of Business Economics (NABE) warns of the dangers of a strict monetary policy versus a lenient fiscal stance.
Despite the optimistic market sentiment portrayed on social media, investors should proceed with caution due to unstable market breadth and warning signs from breadth oscillators.
A NABE survey in February revealed that 57% believe the current fiscal policy is overly stimulating, a slight increase from 54% in August. The importance of reducing deficit and debt for sustainable medium-to-long-term growth was emphasized.
Analysts suggest that U.S inflation started to decline at the beginning of this year. This could lead to interest rate cuts by the Federal Reserve in the upcoming months.
The S&P 500 chart shows a support level at 4,850 (reflecting last week’s lows), stronger support at 4,800, and significant support at 4,600. The index nearly hit its +4σ “modified Bollinger Band” again — often viewed as a positive sign for stocks despite entering overbought territory. This is indicated by equity-only put-call ratios which have started to decrease after remaining static for some time.
This week’s market Relative Strength Index (RSI) stands at 57.06, suggesting a balanced market scenario. Currency values remained stable except for a slight increase in the US Dollar to Japanese Yen exchange rate.
Investors are encouraged to navigate these market conditions carefully — monitoring fiscal and monetary policies while considering global market trends and their potential impact on portfolios.
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