Bn weather, the spring breakthrough is still a long time coming. The situation is similar on the stock exchange. Basically it’s not unfriendly, despite a few heavy showers and dark clouds in between. But now a stable high could form – also on the stock market.
Ryan Detrick, chief investment strategist at Carson Group, tweeted this week that the Breadth Thrust arm has sent out a signal. The “breadth trust” developed by the American investor and financial analyst Martin Zweig puts the sum of the number of rising and falling stocks in relation to each other. The indicator often does not give the starting signal for a bull market, i.e. rising prices.
As Detrick tweets, this has only happened 14 times since 1950. However, the indicator was not wrong once. The broad S&P 500 index on Wall Street was always higher a year later, by an average of up to 23 percent. So is the time of April weather on the stock market over now? After all, the S&P 500 has gained more than 8 percent since the beginning of the year, and the German stock market indicator Dax has gained more than 12 percent, despite the banking turmoil after the collapse of the Silicon Valley Bank and the forced merger of Credit Suisse with UBS.
The signs aren’t that bad. On the one hand, there is the stronger euro against the dollar. This lowers the energy prices, which are to be paid in US currency. That depresses inflation. The analysts at the Dutch company ING believe that there is actually optimism on the financial markets. And this after months of incredulity and hesitation among professional investors, mainly driven by fears of inflation and recession.
But one swallow doesn’t make a summer. Core inflation, which excludes both energy and food prices, is still high in both the US and the eurozone. It remains to be seen whether the markets’ hopes of interest rate cuts this year, at least in the USA, will be fulfilled.