Many investors have faced a rude awakening in the past 6 months, realizing that stocks don't only go up. While everyone is in a different situation when it comes to their investing strategy there are a few things that I am looking for as an investor before starting to average back into stocks, especially tech/growth stocks.
1. Price of oil to come down.
If you don't live under a rock, you have likely at least heard about the price of gasoline. While there are many differences between the actual price of gasoline or diesel and futures. My reasoning behind this is that high gas prices have many economical implications for both consumers and businesses.
I am looking for Crude Oil WTI to not only come down to the 85-95 range per barrel, but also to stay around these levels for at least 1-2 months with less volatility. You can find a chart here
2. CPI to drop 3 consecutive months
CPI (Consumer Price Index) is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available" (bls.gov 2022).
Aprils report came in at 8.3%. I am not to hopeful for May's report and expect it to be closer to 8.7%-9% range. I would like to say this should be the peak but unfortunately I've been wrong before. My reasoning for this is the harsh impact inflation is having on the the middle and especially lower class.
3. The Federal Reserve to slow or pause rate hikes
Now this one may be a little tricky and probably controversial to many investors. I currently believe the federal reserve will continue to raise interests rates as much as the market and economy allows in order to combat inflation.
Part of me believes they will raise rates until something breaks (which would be healthy in my opinion) although I am still uncertain on this. This is another signal I am looking for because while stocks may seem to be appealing at these prices comparable to 6 months to a year ago I still strongly believe that stocks have still yet to reflect the economic downturn that is not complete.
I hope this has been helpful and open your mind up to thinking a bit differently. By no means is this financial advise. I have found than most people (including myself) don't know what the future holds and would encourage everyone to do their own research. I would be curious to hear your thoughts on this and what your outlook on the economy.