Stock Markets Analysis & Opinion

Small Caps and Retail Could Anchor Markets, But Stagflation Risk Looms

 

Growth stocks are on the defensive again given that the FED remains on the fence about interest rates.IWM-Monthly Chart

Small caps and retail though, could still act as an anchor for now, they both held key area-6-7-year business cycle lows-which means recession for now is not definitive.

However, stagflation has very much potential.

Oil prices that broke out over 80 have retested support. A trip back above 86-and could be a signal that the current war in Israel might escalate into oil regions like Iran.

Natural Gas is also rising.

Then add on to the macro:

Dollar and the US debt which keeps growing-a huge part of the US GDP

PPI CPI-hotter than expected.

The ratio between SPY and TLT or risk to off is a concern. (HYG to TLT even more so)

FED minutes-proceed with caution.

Overall, social unrest and anger fuels inflation as chaos is not what you want to see. And the situation appears to be becoming more and more volatile.

As picks go, our quant models are still in growth stocks like META (NASDAQ:META) Tesla (NASDAQ:TSLA) NVIDIA (NASDAQ:NVDA) with stops to protect profits.

ETF Summary

  • S&P 500 (SPY) 435 resistance
  • Russell 2000 (IWM) 177 resistance
  • Dow (DIA) 338 resistance
  • Nasdaq (QQQ) 368 pivotal
  • Regional banks (KRE) 39.80 -42.00 range
  • Semiconductors (SMH) 150 resistance 143 support
  • Transportation (IYT) 237 resistance 225 support
  • Biotechnology (IBB) 120-125 range
  • Retail (XRT) 57 key support if can climb over 61, bullish

Source

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