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The stock market rally that began in mid-June began to reverse by mid-August.On Monday, the S&P 500 fell 2.1% by the market close.
Gareth Soloway, chief market strategist at InTheMoneyStocks.com, says the volatility isn’t over yet, and indeed stocks are likely to hit new lows.
“This is a fear that the Fed will not back down,” Soloway told Kitco News anchor David Lin. That’s it, those few minutes when we touched the 200 day moving average, which is the technical resistance level, as soon as we heard from the Fed they weren’t as dovish as the market had hoped I saw.”
Soloway said stocks may not recover to 2021 highs for years.
“The stock market hit a high in 2021. It won’t stay high for five to 10 years,” he said.
Soloway said deteriorating macroeconomic conditions were to blame.
We are going to get this genie out of the bin called inflation. “It would mean that we can’t get us out of the recession,” he said.
An economy “in stagflation” could last for years, putting pressure on stocks and earnings, Soloway said.
Investors and traders will have to become stock pickers in the future, he said.
“You don’t want to get too close to the index itself. For example, you need to start looking at what’s new technology and what stocks are paying good dividends,” he said.
In addition, a stronger US dollar also contributed to the stock market’s decline, Soloway said.
The DXY index was up 0.73% on Monday.
Soloway maintains his view that gold will be the best performing asset by the end of the year.
Watch the video above for Soloway’s take on Bitcoin, Ethereum, AMC and Bed Bath & Beyond stocks.
Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)
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Disclaimer: The views expressed in this article are those of the author and may not reflect the views of the author Kikko Metals Co., Ltd. The author has made every effort to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the authors can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation of an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the authors of this article accept no liability for loss and/or damage resulting from the use of this publication.
