The 2020s are a unique time in the financial history of the world. Not only is it the first decade in which nearly all trading is digital or online, but it’s the dawn of the AI (artificial intelligence) era, in which everyday practitioners can use programs and algorithms that are highly sophisticated. There’s more data available to investors now than there has been at any time in the past. Using all available resources, people can easily study the factors that affect the stock market. Sometimes it’s challenging to interpret various reports, studies, and economic trends, but it’s all there for viewing. The biggest obstacle is sorting it all out and separating the valuable nuggets of information from the noise and irrelevant numbers.
Price Action in the Major Indices
For investors who want a big picture view of the most current price action in equities markets, it’s helpful to study one-year charts of key indices like the S&P 500, DAX, and FTSE, among others. Depending on what kinds of securities you trade, it’s also crucial to use a platform that supports the asset classes you prefer. The popular metatrader 4 platform for forex enthusiasts is one of the best tools for delving into the analysis of moving averages in the international currency markets. A quick glance at the DAX, FTSE, and S&P one-year charts tell the story of what’s been happening recently in the world’s stock sectors. That’s because a typical exchange index combines vast amounts of data and delivers an overall picture of the health of the various segments and niches. It’s a first step but a necessary one. What’s been happening in international stocks? The downturn began in early 2022.
Price Action Update
Most of the big index charts peaked in late 2021 amid a surge of recovery after the COVID pandemic began to wane. Many small and large businesses all over the world opened up and began earning profits for the first time in almost a year. Then the early 2022 decline began in earnest. As early as mid-January, most indices chart lines broke beneath their 50-day moving averages until a short uptick occurred soon after that. By the end of March, a head-fake bull market caught people off-guard, as bell weather measures like the S&P 500 delivered good news. Prices rose enough to almost completely wipe out all the losses that had taken place since the beginning of the year. Then, the long, downward slide hit. It lasted until late May and included more bad news. Prices fell even further than the initial drop from January through March.
The Short May-June Recovery
There was another short recovery until early June of 2022, followed by yet another precipitous two week long drop. Since the middle of June, world securities prices have been slowly clawing their way back up, but ever so slowly. After a see-saw few weeks, the end of July witnessed a small pricing surge. Few investors are assuming that the worst is over. Most are waiting to see how Q3 results play out and what key manufacturing and earnings reports reveal. By the end of September, after corporate data becomes available for Q3, investors will have a better feel for how the balance of the year will play out.
The US Fed’s Rate Hikes
Stock prices rose after the US Federal Reserve Bank announced a 75 basis point rate hike in late July. The unexpected move sent positive vibes throughout the financial community as many interpreted the action as a willingness by the Fed to stifle inflation that has plagued the US and other major economies for the past six months.
Bull Market Checklist
Is it possible to know when the current bear market ends? Some believe that high volume on rising prices is the central factor that precedes a turnaround. For investors and traders who follow stock prices closely, it’s imperative to pay close attention to volume figures as well. Historically, any change in price that does not include heavy volume tends to burn itself out rather quickly. This is not a hard-and-fast rule, however.
Other factors to watch include extraneous events like wars, inflation data, employment figures, and the price of gold. As of the first weeks of July, most sector values are up for the month, which is something that has not happened since January. But the six-month view is more negative, with all the world’s important index charts posting losses of about 10% or more. Sector data is quite different from the overall picture but taken together, the numbers are not encouraging. The holiday buying season could push retailer profits higher and bring some relief to shareholders in that niche.