Inflation is still rising. What's next for the stock market?

I want to share a quick update after the last inflation data was released last Friday.

I have been sharing for several weeks that this is a battle between curbing inflation by the FED and/or sending the US economy into a recession.

Well, the last inflation data represents an acceleration that puts the FED in the position to become even more aggressive in trying to curb inflation.

The only way the FED have to do it is by making credit conditions worst (cost of borrowing, refinancing, etc going UP), slowing down the economy,and ultimately making inflation manageable again.

Have a look at the last inflation data in the chart and notice the acceleration:

Again, the main component of inflation is food prices and energy, both linked to what is going on with the Russian/Ukrainian war.

So oil prices and PEACE are going to be key in the months ahead to determine the direction of the stock market.

Here is a look at Oil prices that kept rising over the past month:

Unfortunately, credit conditions, although still healthy, start to deteriorate and will continue to do so as long as the FED keeps raising rates and more importantly tightening the quantity of money in the system (M2):

Here is how the M2 Money stock has been diminished by the FED starting in January 2022:

Last, here is a look at the Nasdaq on a weekly chart:

After a reversal attempt, last week was UGLY again and the most likely action for the near future action is DOWN.

Is then all lost?

We’ll be more and more bombarded by pessimistic predictions. SO everything will look worst than it is.

Yes, I think that most likely the stock market will keep going down or sideways for some time until we’ll start seeing a reversal of inflation.

In the meantime, great opportunities will keep emerging because amazing companies will get to very pessimistic low valuations and then really incredible opportunities will be available.

Still, DCA (dollar-cost averaging) is a great strategy especially when it does not feel good like right now. But the next few months may be great to accumulate into great businesses that get cheaper and cheaper.

From the 10X CAPITAL FREE POT [link], here are the most undervalued companies right now: $ZG (it may stay under pressure as real estate business slows down), $SNAP (they need to show a stabilization of revenues) and $KLIC.

All the great progress made through technology over the last 10+ years is not going away! As soon as we get control of the inflation we’ll be able to roar back again.

So let’s stay patient and wait for opportunities to keep emerging. I’ll share here whenever I’ll decide to add to my 10XPOTS again.

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Important:

this is not investment advice. Consult a licensed financial advisor before making any investment decision.

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