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Market Update Saturday 3/26/2022 at 6:30am

Market Update Saturday 3/26/2022 at 6:30am

March 28, 2022
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Today is Saturday 3/26/2022 and it is 6:30am.

What a difference just a few weeks makes in the current market environment. A few weeks ago, many pundits were concerned the Russia – Ukraine conflict was on the precipice of nuclear Armageddon. Reports of a ruthless and horrific invasion were everywhere. Photographic comparisons to WWII went viral in the media and our markets were reacting very poorly to say the least.

Today, the Russian invasion appears stalled and there are many reports of progress being made in peace talks. Our markets have rallied nicely off the lows and now it seems it is more a question of how Putin can save face while Zelensky attempts to save his people and country.

There have been some additional market developments that appear noteworthy. For just the 5th time ever, the S&P 500 gained at least 1% for 4 consecutive days. This development has proven quite bullish in the past as a year later it has been up more than 20% every single time with an average gain of 28%. Of course as always, past performance is never a guarantee of future results.

This type of rare market development appears to signal to me that there is still plenty of institutional powder available to drive the market higher should recent geopolitical turmoil diminish and the looming rate hikes be conducted in an especially prudent manner.

In addition, from a technical standpoint, the recent low for the major averages appears to have been retested successfully and a more reliable double bottom seems to now be in place.  From a trend standpoint, the S&P 500 has rallied all the way back above all three major averages and the Dow and Nasdaq are closing in on recovering their long term trend lines.

Lastly, the most recent correction has worked down the over valuation concern of the S&P 500. The Forward 12 month PE for the S&P 500 has fallen from a recent peak of over 23 to a level of roughly 19. This is a much more manageable valuation given the low relative levels of interest rates.  

Quarterly earnings are up next and I am not seeing any significant earnings estimate reductions in our major positions.

As always, should you have any questions or concerns regarding anything financial, we are here to help. Don’t hesitate to call.