With the Dow Jones Industrial Average down 0.28% last week, after a strong four-week show (a 5.39% rise last month), concern about an economic slowdown is looming.
Interest rates, in particular, are a catalyst for investor concern.
The US mortgage sector is already feeling the pressure, with 30-year mortgage rates already at over 5%, after two years of rates in the 2.5% to 3.5% range.
This interest rate scenario is likely to scare home buyers and limit home price increases, and could do so more than people think.
"Look at how fast prices will go up in 2022 — which is why home buying has stopped," notes Clarice Zuleta on TheStreet.com. “A $500,000 home with a $400,000 mortgage (assuming you have $100,000 to lose) costs you $1,686 a month at 3% in the fall, but now, in April, that home is costing you $2,147 a month — an increase of $461 per month (27.3%)) in just one quarter.”
“Even if you had a $100,000 job and just got a 10% raise, the amount you take home would only be $6000+ per year to pay an extra $5,532, so you better hope nothing else goes up or that books Zulita:
Outside of interest rates, the same economic and geopolitical problems hinder market performance.
TheStreet's Action Alerts Plus team stated on April 8 that "the first full week of the quarter has been challenging." “The Dow Jones Industrial Average was little changed, while the S&P 500 moved lower and more pronounced declines were placed by the Nasdaq Composite Index and Russell 2000.”
Uncertainty is high. “The factors that affected the end of the March quarter — the Russia-Ukraine war and new sanctions, the renewed China coronavirus lockdown, and inflationary pressures — are still with us,” the team wrote. "What the market, observers, and economists are trying to ascertain is what all of this means for the global economy, for profits, and therefore for the stock market."
Going forward, market watchers and economists will be looking to see if the virus is spreading to more cities and provinces in China, a potential threat to alternative shipping channels that could be disrupted by additional lockdown measures.
"It goes without saying now that the same group will be monitoring developments related to the Russo-Ukrainian war, especially after the recent comment by US officials which could last for months or even years," the team stated. “As they do all that, they will likely take into account how the surge in commodities and other input costs as well as global food prices will impact as next week comes with the start of the March quarter earnings season.”
As a result, "we continue to see those weighing down the first-half earnings expectations for the basket of S&P 500 stocks."
With today's trading markets chaotic, investment experts at TheStreet are looking for stability and opportunity in these "buy the dips" candidates this week.
Disney $131.87. Performance of 5 days (-) 3.74%.
Disney stock (dis) - Get the Walt Disney Company report It traded sideways generally from 2015 through April 2019. That's when she revealed her streaming plan, which is now the Hulu, Disney+, and ESPN+ trilogy.
"The company has had tremendous success with these platforms, with 129.8 million subscribers as of Disney's latest quarterly update," wrote TheStreet's Brett Kenwell.
Additionally, the stock was trading aggressively until the Covid hit in the first quarter of 2020.
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Kenwell noted that "despite the damage to its theme parks, studios and cruise ship companies, Disney stock eventually erupted from Covid lows, rising from $81 to more than $200 in less than a year."
Now reality catches up with the mouse's house.
Before the drop on April 7th - the stock fell 1.5% - the shares were trying to recover the 50-day moving average. If that happens, it would open the door for a potential rally to the March high and the $150 region,
“These levels are not on the table, but to get there, Disney shares have to break this week and first 50-day highs,” Kenwell said. On the downside, stocks are dropping below the 200-week and 10-day moving averages. The biggest concern is this week's low. If Disney stock breaks below this level at $136.28, it will not only lose this week's low, but also lose past weeks Little."
If selling rebounds in the scenario, Kenwell says he finds it "difficult to avoid looking" at the $128-$130 region. Disney shares came close to filling that gap at $128.04, but it came out a few weeks ago.
"Now we're seeing if Disney can consolidate the gains and keep the lows this week," he added. "Otherwise, the store's low prices may come back."
SoFi Technologies $7.87. Performance of 5 days (-) 15.65%.
Kenwell is also kicking wheels on SoFi (Sufi) - Get a SoFi Technologies Inc . report Stocks, which were plummeting during the US government's suspension of federal student loan payments.
“Whether you look at SoFi as a meme stock or as a growth stock, it's been tough lately,” Kenwell said.
Recently, SoFi cut its revenue for 2022 and Ebitda directives after the US government extended the moratorium on student loan payments.
While SoFi shares rose 36.5% at one point, they are now back to levels that traders saw three weeks ago.
“When I look at the SoFi chart, I see the stock is pulling back from last month's low of $7.73 and is doing so with a bullish divergence on the RSI scale,” Kenwell said. Note how the RSI is not Makes new bottoms while the stock price. "
Now this difference alone does not make the stock a buy. It's just one piece of the puzzle.
Aggressive bulls can look at SoFi stock as it reclaims last month's low and leaves a new low In play at $7.64.” “The concern here is the rest of the technology and the growth market. If these stocks - like ARKK - continue to fall, it is likely that SoFi will also be pushed down."
"That's the danger, but at least that danger is contained."
Apple $169.79. 5-day performance (-) 2.42%
Although outperforming the S&P 500 so far in 2022, Apple (AAPL) - Get the Apple Inc. report. The stock price continues to zigzag. Could this be another opportunity to buy the dip?
dApple Maven Daniel Martins takes a look under the hood and gauges where Apple may be headed.
The stock market has been weak so far this year, with the tech-rich Nasdaq still in correction territory. On the other hand, Apple stock is down 5% since the beginning of the year.”
But make no mistake: Apple's path to outperformance in 2022 hasn't been without its ups and downs. "For example, the stock was down 15% by mid-March, sometimes lagging S&P 500 returns," Martins added. "However, AAPL has consistently recovered more strongly."
“After flirting with the $3 trillion market cap again, Apple’s share price fell from nearly $180 to an intraday low of $170 in a few days,” he said.
Historically, Apple stock has been better buy after pullbacks. Therefore, the recent drop in the stock price can be seen as an opportunity for new investors to own shares at early December 2021 prices.
Martins noted that there are some caveats to the buy-on-weak approach
"First, the strategy doesn't always work in the short term," he said. "In fact, Apple shares often trend over the course of days or weeks, which indicates that the recent decline may extend further."
Second, the recent 5% pullback puts AAPL stock in just 6% off its all-time high in just about three months. "The graphs show that corrections of at least 15% are those that tend to produce the best one-year gains for lower buyers," Martins noted.
Martins doesn't think short-term traders or buying fans should be too excited about AAPL's recent smoothness. "This is more likely to be market noise than a rare opportunity to own Apple on the cheap," he said.
Instead, Martins believes that investors who are considering buying Apple shares at current levels should be willing to think long-term. These investors need to assess whether AAPL is a good buy-and-hold name within a diversified stock portfolio over the next several years.
"From this perspective, I find it difficult not to like Apple stock, even at current prices that are not very far from the historical peak," he said. According to TipRanks, no single analyst believes Apple's stock is a sell-off. About four in five believe AAPL is a buy, while one in five holds a pending rating."
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