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Dead Cat Bounce - Or The Start Of A Real Recovery?

By Capital.com (David Jones)Market OverviewJun 01, 2022 09:57AM ET
www.investing.com/analysis/dead-cat-bounceor-the-start-of-a-real-recovery-200625180
Dead Cat Bounce - Or The Start Of A Real Recovery?
By Capital.com (David Jones)   |  Jun 01, 2022 09:57AM ET
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As May finished, the S&P 500 managed to close the month a minuscule 0.22 points higher than where it ended April - but as usual, that does not tell anything like the whole story. May was another month where volatility reigned supreme.

Although the US index was broadly unchanged by the end, it still swung through a range of more than 10% during May and, at one point, touched its lowest point since March 2021. The final week saw many stock markets claw back some of their earlier losses leaving some traders wondering - and probably hoping - that a major low had been seen.

But others would say that this is still premature, and investor sentiment remains cautious at best. Geopolitical uncertainty remains with the Russian invasion of Ukraine continuing - although it continues to feel that investors' attention has been pulled away from that war and back to watching inflation and interest rates.

Next week, markets expect an interest rate rise from the European Central Bank. Some would say that central banks have been behind the curve when combating inflation - raising rates too slowly and not by enough.

The ECB is certainly the tortoise in that race and has yet to raise its base rate, but that may change next week. The euro has enjoyed a rare rally against the US dollar over the past couple of weeks, with perhaps the expectation of a rate rise providing something of a tailwind here. It will be interesting to see if this ends up being a case of “buy the rumor, sell the news” if the ECB does raise next week and we see that long euro downtrend resume as the sellers return.

Disclaimer: This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors, not necessarily that of Capital.com or any of its affiliates, subsidiaries, officers, or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Past performance is no guarantee of future results.

Dead Cat Bounce - Or The Start Of A Real Recovery?
 

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Dead Cat Bounce - Or The Start Of A Real Recovery?

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