Daily Stock Market News

The Stock Market Doctor Is in The House

We’ve enticed Dr. Joe Duarte back to our team. And our readers need his advice, now more than ever.

Dr. Duarte (pictured) has been a professional investor and independent analyst since 1990. He is a former registered investment advisor and author of the bestselling Trading Options for Dummies and several other books, including Market Timing for Dummies and Successful Biotech Investing.

He’s also a medical doctor, with a thriving practice. When he’s not advising investors, he’s treating patients.

We’ve put together a new premium trading service for him to run, called Profit Catalyst Alert. With the markets in turmoil, it’s a good time for me to interview Dr. Duarte. My questions are in bold.

Technology stocks have taken a beating lately, largely due to rising interest rates. Do you think the sector is oversold, or is further carnage ahead?

Technology stocks are definitely oversold. But as history shows, sectors can stay oversold for a longer time than anyone expects. What that means is that staying patient for a bit longer is likely to be a good plan.

There are bargains everywhere at this point for sure. The real question is whether the bargains will be even better in a few days to weeks. I do like what I’m seeing in the IT and housing sectors, as well as select biotech stocks.

Robotics is another interesting sector. Of course, history shows that when selling is fear related, it is often a prelude to what could be a historic buying opportunity.

Rising interest rates tend to hurt tech stocks, but which sectors will benefit in 2022 and beyond from Federal Reserve tightening?

Well, if I’m right, the Fed won’t be able to tighten as much as they’ve forecast, which means that if they are forced to reverse course and actually start easing in a few months, we should see a very broad rally in technology and other areas.

One of my favorite activities when looking for areas in which to put my money is to find mismatches between stock price action and affiliated indicators that help quantify money flows into stocks and exchange-traded funds (ETFs). This analysis becomes particularly useful during the sort of volatile periods we’ve seen for the past few weeks.

It’s hard not to be concerned when the market starts crashing. But over the years I’ve learned that panic often creates opportunity to buy stocks and ETFs at bargain prices. This is especially true when the panic is based on news items that are not fully vetted, such as current market volatility associated with the Omicron variant of COVID-19.

Do you expect inflation to worsen this year, or eventually moderate?

That’s a tough question. A lot depends on whether supply chain issues, especially in manufacturing, calm down. Labor shortages play a role as well.

There’s too much money available and not enough production to meet demand for goods and services. And that is the classic definition of inflation.

My guess is that we’ll see some slowing in the rate of inflation but maybe not a full return to what we had in the past few years for some time. I just think we’ve had too many long-term structural changes in the way the economy works.

Which inflation hedges make the most sense right now?

Surprisingly, stocks in select sectors such as energy and commodities may make some sense. But in the current market, investors should stay patient, nimble and very thoughtful about where they put their money.

If I had one sentence to describe what I’m thinking it would be: “if it’s working, stay with it.”

It seems that China’s economy is slowing. What are the ramifications for U.S. investors?

Wow! China is a big puzzle at the moment. They’ve had COVID lockdowns in major port cities and now they have to deal with the Olympics and the ongoing Omicron situation.

But what’s interesting is that China is now lowering interest rates, which of course is the opposite of what the Fed is doing, which means they are worried about their economic growth prospects.

Something will have to give. Either the Fed will back down or the Chinese central bank will start to tighten.

My guess is that the Chinese central bank is actually right and that the Fed will have to fold its higher interest rate tent in the not-too-distant future.

Editor’s Note: In a new symposium, Dr. Joe Duarte, chief investment strategist of Profit Catalyst Alert, revealed his number one profit catalyst trade for 2022.

This trade is poised to make money, regardless of the path of the pandemic or Fed policy. To learn more, click here now.

John Persinos is the editorial director of Investing Daily.

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