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Will an Over-sold Market lead to a Bounce? | 3:00 on Markets & Money

(4/13/22) Markets are back on a sell-signal, and getting back to an over-sold condition, suggestive of a bounce. Coming on the heels of the hottest inflation print since 1981, markets are working to hold support at the 50-DMA. This pattern is not just confined to the S&P 500; International markets are continuing into a very negative downtrend, Emerging Markets have performed terribly this year,. In fact, International and Emerging Markets have been under-performing the S&P since 2009, and we have recommended against investments in these areas for the past year. Small Caps are over-sold and on a sell-signal, and this group's performance has been markedly worse than domestic stocks. And there's not much difference in Mid-Caps, either, also on a sell-signal and very over-sold. Rising interest rates, high inflation, and a lack of new orders will weigh on earnings prospects as the economy begins to slow down. Small- and Mid-caps tend to be better performers in the early stages of a recovery...not so much when things are winding down in the late stages of an economic cycle. We are remaining more focused on Large-caps and domestic stocks for a safety dividend income play, and more defensively positioned than for growth. That will change later in the year as deflationary pressure come to bear, at which time we will shift from defense to growth, particularly in companies that can grow earnings in a slower economy.
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Lance Roberts
Finally, financial news that makes sense. Lance Roberts, the host of "StreetTalkLive", has a unique ability to bring the complex world of economics, investing and personal financial wealth building to you in simple, easy and informative ways but also makes it entertaining to listen to at the same time.
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