Day Traders Diary

8/12/22

The major averages rose sharply on Friday, clinching the fourth straight positive week for the S&P 500 as investors celebrated signs that inflation is peaking. The Dow Jones Industrial Average added 424 points, or 1.27%, to close at 33,761. The S&P 500 gained 1.73% to finish at 4,280 while the Nasdaq Composite surged 2.09% to 13,047.

The S&P 500 rose 3.25% on the week and is on track for its longest weekly winning streak since November 2021. The Dow was up 2.92% for the week, while the Nasdaq Composite moved higher by 3.08%. For the Nasdaq, it is also the fourth positive week in a row.

The averages have been boosted by positive news on the inflation front. The consumer price index was flat from June to July, thanks in large part to falling gas prices, which lowered headline inflation. The produce price increase showed a surprise decline. On Friday, import prices also fell more than expected.

This week's moves have extended a market rally off its mid-June lows. The S&P 500 has gained 16.7% since the lows, and has cut its losses from the peak in half. The Dow had gained nearly 13% and the Nasdaq Composite has rebounded 22.6%.

The positive news has bolstered investor confidence, leading some to believe that the recent gains are more than a typical bear market rally.

The S&P 500 has risen above a key technical level for a second day, and if it closes there, that historically could be a signal that stocks have already bottomed.

For a second day Friday, the S&P 500 traded above thet 4,231 level, the 50% retracement from its peak to trough. It has not closed above that level.

Strategists who watch charts say if that level is cleared, then it typically would signal the market has already seen its bottom and will not return to the lows.

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.