And over at our corporate affiliate Stansberry Research, our friend Brett Eversole agrees...
Today's essay from Brett published in the March 27 edition of his free DailyWealth e-letter. And in it, he shares the details on a contrarian indicator for gains in a specific beaten-down corner of the market...
This Near-Bear Market Could Reverse 17% Higher
By Brett Eversole, editor, Stansberry Research
Stocks entered an official correction last month.
The S&P 500 Index fell 10% from its high – for the first time since October 2023.
The decline has investors spooked. Fear is running wild in the markets. But the S&P 500 only tells part of the story.
Another group of stocks nearly entered a bear market. This part of the market recently dropped as much as 18% from its recent high.
It's due for a reversal, though. This group has fallen too far, too fast. This setup tells us that a reversal is likely. And we could see 17% upside over the next year.
Fifty-year Wall Street legend and veteran of nine bear markets, Marc Chaikin, says your success during the coming market crash all hinges on the moves you make NOW, in the early days of April 2025. And if you want to shield your wealth from the volatility ahead – and potentially even double your portfolio – there is one straightforward move you must make immediately.
Amazon delivers 20 million packages a day... powers some of the most popular websites... delivers medication to half of the U.S. population... and even produces award-winning films and TV shows. But a Wall Street legend – twice featured on 60 Minutes – predicts that "Amazon Helios" will be bigger than all of those... COMBINED. Click here for the full scoop.
Life was good in February. Stocks were hitting new all-time highs. And while there were concerns out there, the market continually shrugged them off.
In recent weeks, the market abruptly priced in all of those fears.
The decline was bad for large-cap stocks. But small-cap stocks took an even worse beating...
The Russell 2000 Index – the benchmark for small caps – dropped double digits in just a few short weeks. And again, at its worst, it traded 18% below its high from late November... putting us darn close to a small-cap bear market.
But the drop is overdone. We can see it through the relative strength index ("RSI"). This indicator looks at recent price changes and tells us when an investment has moved too far, too fast.
When a decline gets too stretched, it shows the asset is "oversold." A snapback rally usually follows. And that makes the RSI a useful contrarian indicator.
An RSI below 30 is considered oversold. And the Russell 2000's RSI recently plunged to 24. Take a look...
The Russell 2000 crashed. But according to the RSI, this move is likely overdone... And small caps are likely to rebound from here.
History agrees. To see it, I tracked what happened with small caps whenever the RSI made similar moves... specifically, when it fell below 25 and then rose back above that level.
We've seen 27 similar setups over the past 46 years. And according to history, those were darn good times to buy. Take a look...
Small-cap stocks have been a good long-term investment. Using a typical buy-and-hold strategy, they've grown 8.7% per year since 1979. But if you bought after an RSI setup like we saw recently, you could have done much better.
Similar instances led to 6.7% gains in six months and 17.4% gains over a year. Plus, the Russell 2000 was up a year later 70% of the time.
That's major outperformance. And it shows we need to remember something important right now...
Fear is running the show today. But when stocks fall – and especially when they fall fast – you can always find opportunities.
It's hard not to freeze when a correction is underway. But according to history, small caps could see a solid gain over the next year... making this sector a smart bet.
Good investing,
Brett Eversole Editor's note: Brett specializes in this kind of approach with contrarian indicators and setups. And to get regular insights like this from him, consider signing up directly for DailyWealth...
Just like the PowerFeed, this e-letter is free to read and publishes each weekday morning that the markets are open. Learn more about DailyWealth and find out how to sign up to receive it by clicking here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+1.02%
4
21
5
S&P 500
+0.67%
54
312
134
Nasdaq
UNCH
7
69
24
Small Caps
-0.48%
193
1218
491
Bonds
+0.99%
Consumer Staples
+1.57%
5
19
14
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Consumer Staples
+2.86%
Utilities
+0.87%
Energy
+0.65%
Real Estate
+0.07%
Materials
-0.65%
Financial
-0.68%
Health Care
-0.77%
Communication
-2.27%
Industrials
-2.4%
Consumer Discretionary
-3.34%
Information Technology
-5.12%
* * * *
Industry Focus
Aerospace & Defense Services
7
22
4
Over the past 6 months, the Aerospace & Defense subsector (XAR) has outperformed the S&P 500 by +4.63%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors and has moved up 2 slots over the past week.
Top Stocks
TGI
Triumph Group, Inc.
ATRO
Astronics Corporatio
GD
General Dynamics Cor
* * * *
Top Movers
Gainers
DFS
+7.54%
LYV
+4.44%
FOX
+4.33%
AIG
+3.97%
WBD
+3.47%
Losers
MRNA
-8.9%
LULU
-3.41%
CRL
-3.23%
ARE
-3.23%
SNDK
-2.78%
* * * *
Earnings Report
Earnings Surprises
PRGS Progress Software Corporation
Q1
$1.31
Beat by $0.25
PVH PVH Corp.
Q4
$3.27
Beat by $0.06
* * * *
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