Range-Trading Torture Ahead?
|Traders demolished the shares of three of America’s biggest banks — JP Morgan, Citigroup and Wells Fargo — on Friday after they reported very impressive Q1 earnings. A classic example of ‘buy the rumor, sell the news”? So it would seem, although it remains to be determined whether Wall Street will punish other economic sectors in the weeks ahead for similar sins of success. Will the shares of companies involved in energy, pharmaceuticals and manufacturing get pummeled no matter how strong their earnings? It will come down to whether investors think their performance has peaked. Earnings reports due out over the next several weeks are expected to be the best since 2010. However, interest rates have been rising for two years, and this is already creating headwinds in the minds of investors, if not yet in the statistical economy. Add in a dollop of trade-war paranoia and it’s difficult to see stocks moving significantly higher in the months ahead. On the other hand, the long-term charts do not suggest a collapse is imminent. Range-trading for the next six to nine months would be like Chinese water-torture, but we should be prepared for it nonetheless as a possible second-best case for stocks in 2018.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.