Like an elevator, the stock market usually goes only in two directions – up or down. It rarely goes sideways, although there are times when it travels in a narrow trading range between an upper and lower bound, that is the exception to the rule. So, in what direction is the market headed next?
Some “technical analysts” (aka, chart readers) believe that since the 50-day moving average recently crossed above the 200-day moving average (aka, a “golden cross”), that the market is going to go higher. (Please note that the quotation marks above are not implying anything negative, just noting the term for people who are not familiar with it.) In addition, if you read the stock market almanac, you would know that April is typically a good month for stocks.
However, there are also some who believe that the clouds on the horizon are indications of a coming storm. There are billions of dollars of net outflows from equity funds, and billions of dollars of net inflows to money market funds, which is called a “flight to safety.” There was a recent yield-curve inversion (where short-term rates are higher than longer term rates), which usually precedes a recession. In the Federal Open Market Committee (FOMC) meeting minutes released today, the Fed noted concerns about global growth in substantiating their decision not to raise interest rates the rest of this year.
So, what do you think? Do you believe that the stock market is headed higher, because of the golden cross and the stock market almanac? Or do you believe that the market could be headed lower, because of the risk of a recession and concerns about global growth?