Bullish or Bearish…You Decide

The Fed is worried about a recession and experts are split on the issue.

Bullish or Bearish…You Decide

Right now, there is a lot more bearish energy than usual. Even the Fed is calling for a downturn... and those who don't worry about a depression are concerned about stagflation. For anyone who hasn't taken Econ 101 in a while, this is the recession where there is both high inflation and rising unemployment. A quick look at the stock exchange would have you believe that we are in a new era of prosperity. Which side is correct? Find out what I think ....

Enjoy this updated version my original weekly commentary that was originally published on April 13th, 2023 by the POWR Stocks under $10 newsletter.

We'll go through some reasons people are bearish.

  • The inflation rate is still higher than the Fed's goal rate

Here are some reasons people are bullish.

Everyone else is bearish

I'm joking but also not.

There are some bullish technical indicators, such as the fact that S&P 500 has held above 4,100, and is on the cusp of breaking through the 4,200 mark, which would signal the start of a new bull run.

Investors are also looking forward to the time when Federal Reserve will pause its rate-hike strategy. This should happen soon, based on the Federal Reserve's initial terminal rate.

When everyone is bullish, the market will turn up.

Contrarian investing has its roots in this strategy.

Even the Fed is bearish... they are the ones who orchestrate this entire thing.

The minutes of the Fed's meeting in March state that "Given the staff's assessment of potential economic effects from recent banking-sector development, their projections at the time included a mild depression starting later this summer, with a subsequent recovery over the next two years."

This is not a good sign for stocks. Look at how things went for the bears in Q1. The S&P 500 and Nasdaq have managed to beat the naysayers after a few chops.

Personal, I still lean more towards the bearish side than the bullish. I know that this is the most popular option.

But I am still a big fan of our "market-of-stocks" strategy, which looks for companies that are poised to benefit regardless of the market's performance.

If nothing major happens, I'll be sending you a few new picks tomorrow.

For now, we'll continue to buy cautiously. We don't wish to look back at the end of the year on all the potential gains we might have missed by waiting to find the right time to invest.

We will keep an eye out for bearish fundamentals and action to ensure we do not get mauled.

What Next?

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All the best!

SPY shares closed Friday at $412.46, down $1.01 (-0.24%). SPY shares have gained 8.26% year-to-date compared to a % increase in the benchmark S&P 500 Index during the same time period.

Meredith Margrave, Author

Meredith Margrave is a financial expert who has commented on the market for over 20 years. She is the editor of POWR Growth, and POWR Stocks under $10. Meredith's most recent articles and her background are available.