Currently here are many mixed messages in the markets. While many companies have been beating their low earnings expectations, the tech companies, which have been holding up the economy, are underperforming. With these contradictions, investors are asking, “What will make portfolios go up?” Our answer in the video.
Investors saw the markets take a step back last week. The cause came from the low expectations on the earnings reports which we will start seeing later today. The good news is that if the earnings expectations bar has been set low, the markets might be able to jump over it and bring some momentum to the markets.
Janet Yellen’s dovish statements last week canceled any notion that there would be a live Fed meeting in April where they would discuss raising interest rates. This limits the Fed from making market altering news until their June meeting, making oil and corporate earnings the top drivers of the markets.
Investors felt an impact on their portfolios from a falling dollar as the Fed did not cut rates and lowered their rate hike expectation from four to two this year. That caused the falling dollar which increased oil prices.
In the big picture of the world economy our economy could be looking stronger as others weaken. However, it could also have a negative affect on US investors. When the world economy sneezes, we all feel the impact.
As we watch these short bear market rallies occurring our technical indicators are showing us that the top 20% of short selling stocks are providing the most upside in these market rallies. These rallies are not fundamentally driven. It’s people covering their tails.