Yesterday, March 17, the stocks, and especially the technology stocks, that have been pummeled in 2022 continued their three-day bounce.
For another day, at least, buy on the dip proved to be a very profitable adventure.
Lithium recycling startup LiCycle (LICY), for example, gained 10.18% after climbed 6.74% on Wednesday, March 16. Electronic payments platform Block (SQ), formerly known as Prince (no, I mean formerly known as Square) rose 10.26% after picking up 12.57% on Wednesday, March 16. Cybersecurity newcomer SentinelOne (S) climbed 7.48% after a gain of 13.47% on March 16.
Stocks like these (and many more) were just too cheap traders decided.
But there were signs of, possibly (and we’ve been down this road before so let’s just say “possibly”), of a new caution. A sell on the bounce caution.
New York traded shares of China’s tech giants moved lower on March 17 instead if following through on the amazing gains of March 16. Alibaba (BABA), for example, was down 4.39% on March 17 after a stunning pick up of 36.76$% on March 16.
Airline stocks that had soared on falling oil prices on March 16, with United Airlines (UAL), for example up 7.71%, were roughly flat on March 17 with a gain of just 0.56%. (Which did have something to do with the drop in oil (and jet fuel) prices on March 16 and the roaring recovery–West Texas Intermediate bounced 8.47%–on March 17.
But to me, the market action on March 17 also looked like a cautious decision not to chase all the gains from March 16 higher. Microsoft (MSFT) gained 2.52% on March 16 and just 0.28% on March 17.
I think what we’re seeing is a gradual transition in sentiment as investors and traders absorb not just the Federal Reserve’s interest rate increases–since that is mostly in the market–but the likelihood of a recession in the second half of 2022 or in 2023.
If I’m right–and “if” is always an important word to keep in mind when we talk about projected recessions–we’re at the early stage of a market transition that will play out over the spring and early summer months.
My scenario is that stocks will show a tendency to advance on yet another Pandemic economic reopening and recovery in the spring and summer months. (I say a “tendency” because I don’t expect a big and widespread move but rather gain focused on recovery stocks like the three summer traded in my YouTube video of March 17 “Three great summer trades get trickier.”) But that I expect this tendency to spend itself gradually over the summer. We’ll move into the fall with more and more investors and traders looking to buy “recession” stocks.
I’ve been working for the last week on explaining this complicated picture for my new Special Report “3 Portfolio Strategies for a Recession and 10 Recession Stock Picks” on my paid site JubakAM.com. That report is just about finished and I expect to have it completed and posted and in subscribers email boxes on Sunday, March 20. If you’d like to subscribe to that site, I’ll be sending out a 20% off discount offer to the mailboxes of readers of this site on Tuesday, March 22.
