Broker Check

Perspective Matters

April 28, 2023

Longer Term Technical Perspective

Since megacap tech stocks are the ones driving this market, for a longer term technical perspective, we need to look at a chart of QQQ.

To give a longer term perspective, the chart is a monthly chart.

Technical analysis is part science and part art. It is the art part that allows bulls to see what they want and bears to see what they want.

From the monthly chart, bulls contend that the stock market is forming a bottoming pattern. In our teams analysis, the weight of evidence is in bulls’ favor.

From the chart, bears contend that the relative strength index shows that the rally in the stock market is just an oversold bounce.

When we look at charts in daily and weekly time frames along with the monthly chart, technicals are on a buy signal.

It is true that a large number of investors and big box money managers invest and trade based mostly on technicals. However, with our teams of analysist and systems, we believe no investor should base their decision mostly on technicals.

One reason that many investors choose to rely only on technicals is that markets are complex and investors are often confused about the direction of the market; the solution some investors have found is to focus only on technicals and ignore everything else. This is a serious mistake.

Based on our teams of analysts and decades of experience in the markets, we are performing a 360 degree analysis of the markets and looking at multiple dimensions. 

  • Technicals
  • Fundamentals
  • Quantitative
  • Macros
  • Sentiment
  • Liquidity

While fundamentals and macro continue to deteriorate, technicals are giving us a buy signal and we continue to be cautiously optimistic as positive data continues to come in.

It’s been a big week for earnings this week, particularly for the widely-watched tech heavyweights such as MSFT, GOOG, META, and AMZN.

There seems to be a lot of capital concentrating on the big stock names.

These big names are very expensive stocks, but right now investors do not care because they are excited about artificial intelligence.

AI will provide some big opportunities for investors but we must be patient.

GDP Date Update

Q1 GDP numbers were release yesterday and came in at 1.1% annualized growth vs. 2.0% consensus. This indicates that the economy was much weaker in the first quarter than analysts expected.

So we have a still growing economy, albeit at a slower pace. Despite all the talk of recession, we're technically not in one.

But like we said last week, we could have already had that recession.

Next week we have the Fed policy announcement on Wednesday (5/3) and earnings from tech and index giant AAPL on Thursday (5/4). So it should be another “interesting” week in the Markets.

As per the Fed Fund Futures, there is currently an 85% chance of a 25 basis point hike and a 15% chance of no rate change. The certainty of the rate hike has been going up over the last few days.

More to come next week.

Until next time.

Your Prestige Wealth Management Team