Game of Trades: For the 4th Time in 2022, the S&P 500 Is Rejected After Being Wrong About Inflation
Investors are likely sick of hearing about inflation impacting their investments this year. Particularly as inflation continues to remain strong, as seen at every trip to the gas station or grocery store.
But inflation still matters. As does the move to crush inflation. Year-over-year inflation remains strong at 8.3 percent. There’s little sign of a cool-down yet, and investors will likely be in for more pain before things improve.
On a technical basis, stocks were starting to get support ahead of the latest CPI numbers. But with inflation still going strong, the S&P 500 has once again rejected its attempt to move higher.
In the short-term, that likely means that stocks will continue to trend lower, likely re-testing their June lows. That’s also confirmed by bond markets, where yields continue to creep higher as stocks bounce around within their larger downtrend.
That suggests that investors should remain defensive here, and look for a further breakdown in stocks. But markets are at a pivotal place where the most recent attempt to rally has failed.
Long-term accumulators of stocks can continue to pick up bargains here. But those more trading-oriented should continue to expect more downside. We’ll still need to see further declines in the CPI on a year-over-year basis before we can finally get to the end of the current bear market.