Is now the time to buy stock indices?
The Russell, and other stock indices, have been in a retrace move since November 2021. High inflation and fears of a predicted recession are the driving force of the current downside.
Is now the time to re-enter equities? Is the retrace move coming to the end? Have the markets found a bottom?
Here are my thoughts...
Fundamental Analysis
Inflation is coming down and seems much more under control. High inflation and rate hikes are no longer a shock to the markets but have become a norm. Obviously, inflation is still high but it does look like it has peaked. The markets are expecting further minor rate hikes to continue to bring inflation down to a more healthy rate.
Last weeks US non-manufacturing PMI figure suggests that the US could be heading into the expected recession - what has been predicted by many over the last 6 months or so could be starting to crystallise. A recession is not a good thing, but recession could be good for the equity markets, as economies will be acting as most analysts and traders have been expecting, which brings some sense and stability to the markets.
Technical Analysis
The retrace move recently found support around a key weekly horizontal level and around the 50.0% Fibonacci retrace level. On lower time-frames, price has closed above a consolidation area. All is marked on the chart above.
Summary
So, going back to my original question... 'Is now the time to buy global stock indices', my answer is 'I don't know', as nothing is certain within the financial trading, no trades or analysis is guaranteed. Saying this though, I went long last Friday based on the analysis in this post. If price does swing lower, my next areas of interest are around 1650 and around the weekly 61.8& Fib level.
Things to beware of are; inflation starting to climb again, a deeper recession than expected. Either of these things (hopefully not both of them!) could bring stock markets lower.
Is now the time to re-enter equities? Is the retrace move coming to the end? Have the markets found a bottom?
Here are my thoughts...
Fundamental Analysis
Inflation is coming down and seems much more under control. High inflation and rate hikes are no longer a shock to the markets but have become a norm. Obviously, inflation is still high but it does look like it has peaked. The markets are expecting further minor rate hikes to continue to bring inflation down to a more healthy rate.
Last weeks US non-manufacturing PMI figure suggests that the US could be heading into the expected recession - what has been predicted by many over the last 6 months or so could be starting to crystallise. A recession is not a good thing, but recession could be good for the equity markets, as economies will be acting as most analysts and traders have been expecting, which brings some sense and stability to the markets.
Technical Analysis
The retrace move recently found support around a key weekly horizontal level and around the 50.0% Fibonacci retrace level. On lower time-frames, price has closed above a consolidation area. All is marked on the chart above.
Summary
So, going back to my original question... 'Is now the time to buy global stock indices', my answer is 'I don't know', as nothing is certain within the financial trading, no trades or analysis is guaranteed. Saying this though, I went long last Friday based on the analysis in this post. If price does swing lower, my next areas of interest are around 1650 and around the weekly 61.8& Fib level.
Things to beware of are; inflation starting to climb again, a deeper recession than expected. Either of these things (hopefully not both of them!) could bring stock markets lower.
Disclaimer
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