Stocks closed higher Friday to snap a three week losing streak. The move follows the worst weekly decline for the S&P 500 since 2020. Michele Schneider, Partner and Director of Trading Research & Education for 'MarketGauge.com,' joins Closing Bell to discuss today's close, historical precedent for current market activity, and more. 


Closing Bell

Stocks Close Higher to Snap a Three Week Losing Streak

So joining me now is Michelle Schneider, partner and director of trading Research and education for market gauge dot com. Michelle, always good to see you. And what are your thoughts on the stock market action this week? Was it a simple relief rally or do you think we might be able to climb further from here? Well, if we look at the last quarter which ended in March, we had a 13% rally in six days during a bear market and then of course proceeded to go right back down. So now we've had about a 7% rally with a week to go before we see the end of this quarter. Which means We could easily see another six or 7% rally from here ahead of a long weekend. So the rebalancing of portfolios at the end of quarter is not a great surprise considering the market was very oversold. So I'd say that's a possibility. The question really is that there's a couple of very key factors to look at. Obviously Powell had a lot to say this week, as we know, but one of the things that you really need to hear that, he said, which a lot of people heard Dovishness, Dovishness was a we can't really control food and energy prices by raising rates. Number one, we are committed to fighting inflation above all else, even at the sake of possible recession. Number two and number three is that we really have found out that the Fed has actually been buying more bonds adding to the balance sheet in order to raise the money to pay for the higher interest rates, which I read from somebody who used to work for the Federal Reserve Smacks of what happened in the 80s, during the savings and loan debacle when banks went under. So There's danger there. So basically to answer the question, yeah, I think this is a relief rally and I would love to take you back to bell bottoms and platform shoes if I will to the 70's because I think it's a great comparison. Okay. So yes, I think that's the reminder, right, Michelle that some of us in our lifetimes, you know, we're seeing unprecedented circumstances that we've never seen before in the stock market. But of course history is an indication and we're seeing the fastest rate of inflation still in 40 years. And you're right. Um, There are questions about whether or not this could be a late 70s, early 80s scenario, so it sounds like you're still a little bit bearish on the stock market overall. What would you recommend to investors to traders out there? What's the best way to manage this right now? Well, if you are an active investor, you're gonna have a lot of fun during these pops and, and I I said, it's sort of facetiously about the seventies, but there's a lesson to be learned in 1972 at the end, the dow jones industrial average reached a peak of 1000 when the oil embargo happened in 73 it dropped 40% the market, It rallied 67% after that. Once the oil embargo was over, Not quite matching the highs and then proceeded to have another 20, decline before we went flatline for a while as commodities were starting to really take off again. And that's really what I think I see happening still. We can have these vicious rallies and selloffs but longer term. I don't think that we are done with inflation and I certainly don't think that the Fed necessarily has the stomach to do what they may have to do. That's why there was sort of the pivot by power. Well, maybe this, maybe that. So yeah, I think that you should really be thinking about taking profits when you get these big rallies and then once you see that turnover possibly either protecting your profits, but really creatively thinking out of the box, what else could possibly trend over the next few years? Even if the market has to take somewhat of a pause to reset the whole economic picture Michelle Schneider, I wish we had more time. It's certainly a busy news day today. We appreciate your time. Michelle is a partner and director of trading research and education from market gauge dot com