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AAP Morning Comments: Markets, Ukraine War, Housing, Fed, Commodities

Strength in the job market is the reason the Fed might take a more guarded approach, so as to not derail the economy.
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Last Week's Portfolio Changes

Markets continue to roll on as the month of March shapes up to be a positive one. With only five trading days left in March there is some clear runway to post the first positive month in 2022. The technical picture has improved greatly over the past week or so with increases in breadth figures, increasing volume, positive trends, and breaking through chart resistance.

However, we really do not have much of trend, which is what we like to see for a sustainable rally and continued price increases in the stock market. A straight up market as we've seen recently is vulnerable to some heavy selling when overbought conditions are reached, such as we currently have. Yet, trying predict a pullback is foolhardy.

We continue to have an eye on the Ukraine situation and if the war will start to see an end. For now, there appears to be no end in sight but the recently added sanctions on Russia are meant to severely cripple their economy. How long they can last is anyone's guess, but as this situation starts to clear up the markets will likely cheer.

Economic Data

The economic data is still coming in mixed. Housing and mortgage numbers took a leg down this week, not surprising with a sharp rise in interest rates. Jobless claims dropped once again and are at extremely low levels. Fed Chair Powell noted recently the strength in the job market, one of the best times ever to get a job. This fact is the reason the Fed might take a more guarded approach, so as to not derail the economy. However, the rhetoric from Fed members seem to indicate a much more aggressive approach to interest rate policy.

Commodity prices continue on their fantastic run higher, yet we see crude oil pulling back some Friday amid some profit taking. Some commodities have reached levels not seen in years, and since the end of the quarter is nigh we could see more traders/investors booking those fat profits soon. Volatility has come in sharply over the last week, and that is likely to affect prices (coming down off their highs).

Action Alerts PLUS has no position in the stocks mentioned.