The real problem with the recent inflation figures is that they indicate accelerating cost pressures, particularly in areas such as energy, health care and benefit costs, and other production-side costs. That puts further pressure on profit margins. As I've noted before, value is not determined by how far a stock has declined, but by the relationship between prices and properly discounted cash flows. From any historical perspective, stocks remain breathtakingly overvalued. Over the short term, however, I have no opinion about stock price direction.
Large moves are more likely than small ones.
That's about all I can offer. On the other hand, there's a real risk that after two years of stagnant stock prices, investors may be inclined to move some funds off the table. And anytime a lot of investors get the same idea at the same time, the price moves tend to be large. So expect some wild movement, both up and down, over the coming sessions. As for trend conditions, they're becoming increasingly tenuous, but we're still clinging to a favorable reading.