🧸Is the market making a comeback?🚽

After a lacklustre performance for the year’s first half, the Nasdaq is roaring back into a new bull market on Wednesday. 

Indeed, the Nasdaq had fallen into the bear market in March, reaching a low on 16 June. However, with the recent CPI data showing inflation moderating, it had jumped by about 2.9% on Wednesday, climbing above 20.7% from its June low. 

This comes at a backdrop of robust corporate earnings and ongoing progressive economic data such as the firm July jobs report, which helped to alleviate the fear of a recession. As we looked at S&P 500, the better-performing stocks tend to be found in the sectors such as technology and consumer discretionary names, which had suffered badly in the first half of the year. 

⛳Are we out of the woods?💰

Not exactly. Pika World believes that the recent recovery isn’t as firm as expected. As we are rising from the low base, a recovery of 20% in Nasdaq is not significant enough to bring us back to the peak. 

Moreover, based on historical standing, the beginning of a new bull tends to be short-lived. A look into 2000 to 2022 showed that Nasdaq tends to have numerous upswings of more than 20% but fell sharply in the months after it occurred. It was until October 2002 that we saw the index moving into a bull mode that lasted for some years.

We can observe the same pattern in the 2008-2009 financial crisis. While the Nasdaq had gained around 25% between November 2008 and January 2009, it tumbled about 23% from January to March before it hit the lowest level during the crisis. 

Therefore, Pika World remains cautious that the current rebound could be temporary and maintain our careful stance while accumulating our favourites during red days. 

What’s on the menu today?

At 8.30 pm, we will receive the initial jobless claims, which we expect to remain relatively stable at 1407K compared to 1416K in the prior period. 

At the same time, the Core PPI data will be released too. We expect it to maintain the same level as the prior period of 0.4%. Recall that PPI data is critical since if producer input cost unexpectedly jumped, we could see retailer increasing their price too and contribute to the inflation cycle once again.