• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Stock Market Fallout: How To Tweak Your Investment Strategy
Stock

Stock Market Fallout: How To Tweak Your Investment Strategy

by March 10, 2023
by March 10, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The stock market has been struggling the last few days, losing all gains made earlier this month (March). It’s almost as if there’s a tug of war between investors and the news. In the last couple months it was between investors and the Fed but now investors are facing a bigger hurdle—the SVB Financial Group (SIVB) fallout. 

The State of the Stock Market

In the more recent past, Fed Chairman Powell’s comments about possibly continuing to hike interest rates would shift investor sentiment. During Powell’s testimony on Capitol Hill, hawkish comments impacted the stock market. Equity indexes fell, Treasury yields rose (the two-year US Treasury yields, $UST2Y, went higher than 5%), the CBOE Volatility Index ($VIX) rose, and the US dollar inched higher. 

The S&P 500 just didn’t seem to be able to hold on to its gains of the first two trading days in March. In its last up leg, it didn’t make it to its last high and instead stalled at its 20-day moving average with a shooting star candlestick pattern before selling off. 

The S&P 500 Index ($SPX) has fallen below its 200-day moving average, and it’s in a clear downtrend. The next support level is at around the 3800 level. If the index falls below this level, it could retest the October lows. And if you look at relative performance, 10-year US Treasury yields and the US dollar are performing better than the S&P 500. Note: Click on chart for live version.

CHART 1: S&P 500 INDEX TRENDING LOWER. If the index stays below its 200-day moving average, the next support area is below the 3800 level. Chart source: StockCharts.com. For illustrative purposes only.

The Dow Jones Industrial Average ($INDU) and Nasdaq Composite ($COMPQ) followed similar patterns. And the S&P 600 Small Cap index ($SML) really got hit hard. A large chunk of it (17.9%) is allocated to the Financials. In light of the banking fiasco, that shouldn’t be a surprise. The Financial sector was the worst performing sector on Thursday. And we could see it continue given that the banking turmoil is just starting. 

Investors are spooked. Just look at how much the probability of a 25 or 50 basis point interest rate hike by the Fed changes from day to day. If you monitor the CME FedWatch Tool, you may have noticed that after Powell’s testimony the probability of a 50 bps hike rose to 72% but went back to lower than 50% on the negative news from a couple of banks. So, as it stands right now, it could go either way—the Fed could raise interest rates 25 or 50 bps. 

Don’t let what’s happening in the banking sector distract you from inflation, though. Today’s jobs number—311,000 vs. 225,000 estimated—came in hot which means jobs will probably continue to feed inflation. But unemployment rose to 3.6%, higher than the 3.4% projected rate and wage growth is slowing. So mixed messages from the February jobs report but perhaps a little bit of hope that inflation is going in the right direction. 

But the jobs data came at the same time as a pretty ugly event, one that’s more painful than the pain inflation is creating for your wallet. When a bank that’s a big lender to many tech companies fails, it’s not a stretch to think it’ll bring back memories of the 2008 financial crisis. The first thought that could go through investors’ minds: which bank is next? 

The market is feeling the impact. Treasury yields fell. The two-year yield, which was above 5% after Powell’s comments, fell to 4.62% and the 10-year fell to around 3.75%, below the 4+% it hit earlier this month. 

It’s Worth Looking at Bonds

When the market is so dependent on news—going up when the data supports cooling inflation and down when inflation appears to be hot—the investing landscape becomes more complex. Is it time to panic sell or is it time to pick up some value investments? 

Of late, every time the market has sold off, buyers have come in and sparked a rally, albeit short-lived ones. But after SVB’s shutdown, investors seem to be running to bonds. Take a look at the chart of iShares Trust 20+ Year Treasury Bond ETF (TLT). It’s approaching its 200-day moving average, and if TLT moves above its February 2 high of 109.08, it could indicate that bonds may be having their time in the sun, after a long hibernation.  Note: Look at chart below for live version.

Watch to see if the market finishes this ugly week on an uglier note or if there’s some recovery at the close. There’s no way of knowing if this bearish run will be short-lived. The stock market has been in a critical juncture for a while and investors have been looking for the market to provide some direction. It looks like the direction may be lower. It may be time to revise your investment playbook. Regularly analyze Your Dashboard and identify which areas of the market are performing better than others. 

If bonds start showing strength, after their long hibernation, you may want to start modifying or building bond ChartLists. Another area to regularly visit is the Market Summary. If the markets start shifting in one direction, these tools will help you identify which areas of the market you should be investing in. 

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • SBUX Stock Price Skyrockets: Is Now the Time to Buy?
  • Time for Sweet Talk: Sugar Futures
  • Important Market Breadth Indicators to Watch: Making Sense of Three Consecutive Down Days
  • MEM TV: Check Out These Bright Spots in a Weak Market
Share
0
FacebookTwitterPinterestWhatsapp

previous post
SPY Dips But Tech Is Now Back On Track
next post
Campbell Soup: Warm Comfort for an Ailing Economy?

You may also like

The Hoax of Modern Finance – Part 7: The Illusion...

February 8, 2024

American Association of Individual Investors (AAII) Breaks Record

March 21, 2025

10% Downside Risk For Stocks as Value Takes The Lead

April 24, 2024

SPOT ETFs APPROVED!! The Technical Case for Bitcoin

January 11, 2024

Comparing Gold to the S&P 500

February 19, 2023

Week Ahead: VIX At A New Multi Year Low; Exercise...

July 29, 2023

Where to Find Stock Opportunities in Bear Territory

October 27, 2023

The Ord Oracle February 15, 2023

February 15, 2023

The Best Cybersecurity Stocks Showing Profitable Investment Opportunities

October 11, 2023

Stock Indexes Continue Winning Streak: Growth Stocks Still In the...

November 9, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Week Ahead: Markets’ Reaction to Exit...

    June 3, 2024

    DP Trading Room: AI Bubble Deflating

    September 9, 2024

    Week Ahead: Corrective Undertone To Persist...

    August 27, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here