No amount of “oversold” was going to make this market bounce. We weren’t being driven by technicals down, though they are great at hammering home just how serious it was out there. The S&P 500 was up 4% at its peak Tuesday, April 8th, and closed in the red. The last time we saw that? October 17th, 2008. Yes, it was that serious.
How did we get there? It’s not the tariffs themselves, rather the uncertainty that this entire conversation is creating. The reason for the uncertainty is the constant evolution of the situation. That’s not an indictment of the strategy. Rather, it’s an evaluation of the market’s assessment of the situation.
Think about the times over the last few weeks when we got a rally. They occurred during times of tariff pauses with clear deadlines and other countries coming to the table for negotiations. In other words, the rallies occur when uncertainty clears up.
A Hopeful Rally
Monday’s rally was built on hopes of countries coming to the table to negotiate as well as a tariff implementation pause. When the tariff pause rumor was debunked, the market came back down. Then EU tariff talks helped it get its footing again.
If you want to navigate through the near-term future of this market keep two things on your mind, levels of uncertainty and liquidity. The Fed and liquidity had taken center stage for so long, now it’s taken a back seat to uncertainty.
Now, I’ve seen a lot of trading days first hand. Wednesday was certainly among the whoppers. It felt like we were on the ropes after Tuesday’s action. That nearly full bearish engulfing left something to be desired. After watching the Asian session before calling it a day, I was looking forward to Wednesday morning. I thought we might have an opportunity. I spent the afternoon and most of the evening gaming scenarios out.
It started with Chinese retaliatory tariffs early, at 7am. The news hit just as the futures markets were making overnight highs. It led to a huge dip in the market and some instant risk-off. It was short-lived though and equities quickly recovered.
I had a feeling we were in for an interesting one, but nowhere near this interesting. Early commentary from Treasury Secretary Bessent was met with some swings. It wasn’t until President Trump posted “It’s a great time to buy” on Truth Social that I thought we had a real chance of seeing something dramatic happen. There was a decent 10-year auction, then BOOM, news of a tariff pause.
Over the edge we went, rocketing higher and putting up numbers you see once every fifteen years or so. In the end, it was the 2nd best day ever for the NASDAQ Composite, and the 3rd best day ever for the S&P 500. The other two were in October 2008. Re-read that if you think we are totally out of the woods. We most certainly are not. However, there is some more certainty surrounding tariffs right now, which the market is cheering.
We were very oversold. Now we have some room to run.
Keep reading . . .
------------------------------------------------------------------------------------------------------
Buy These Stocks BEFORE They Report Earnings
Next week, 150 companies are scheduled to report earnings. What if you could know in advance which few would shock Wall Street by beating earnings expectations and pop in price?
Now you can.
Zacks proprietary "ESP" formula predicts positive earnings surprises with unthinkable 80% accuracy. That doesn't mean we make money 80% of the time, but recent picks were closed for gains of +49.8%, +37.0% and +28.5% in as little as 4 days.¹
What stocks is the system picking today? Find out before doors close to new investors at midnight Sunday, April 13.
See Surprise Stocks Now >>
------------------------------------------------------------------------------------------------------
Trade War in High Gear
There are still some obstacles in our way. The trade war with China looms. The Trump administration may have put the rest of the world on pause, but they have yet to deal with China. Reciprocal tariffs from Beijing were met with even larger tariffs from the US. It’s safe to say that neither side is backing down yet.
China has a few cards up its sleeves. Namely, the $760 billion in US Treasuries it holds. (For perspective, foreign nations hold over $8.5 trillion in T-Notes.) If China dumps their notes on the open market, it puts upside pressure on Treasury Note Yields, which the US is trying to keep under 4.5% as lots of notes roll over.
Opportunities Abound
The great news is that there is still a very bearish sentiment that’s fallen all over Wall Street. Wednesday was a big step in the right direction, but there is still plenty of work to be done. A quick peak at one of my favorite overbought/oversold indicators, the Percent of Stocks Above the 200-Day Moving average reached extremes earlier this week. At one point on Monday, less than 14% of stocks were trading above this key moving average. That means the market was oversold to a point we hadn’t seen since October 2022.
Image Source: TradingView
That turned out to be an incredible opportunity back then to add equity positions. The S&P 500 surged over 60% to all-time highs earlier this year from that point.
This most recent pullback should be seen as one thing, an opportunity.
The Power of the Zacks Rank
Here’s the good news for long-term investors: a lot of great stocks are on sale and we may see more fantastic deals in the near future.
But how do you find stocks that have a real shot at significant outperformance?
The Zacks Rank is a great place to start.
Stocks rated highly by the Zacks Rank have the strongest underlying earnings trends. Buying these stocks on dips can put the odds strongly in your favor. Short-term market fluctuations happen at a much greater frequency than a reversal of an earnings trend. Especially when short-term fluctuations are caused by something like tariffs. That means investors can use them to find stocks that stand to profit – and continue to profit – despite what’s happening with the global political landscape.
Look for Big Wins This Earnings Season
Decades of research show that shares of companies that beat earning expectations are among the most likely to increase in price, regardless of market conditions.
That is why the Zacks research team invested so much time and effort to create a special strategy that detects rare companies that are most likely to both beat earnings and jump in price.
This strategy predicts positive surprises with 80% accuracy, a previously unimaginable feat.
You can see all the stocks turned up by this strategy inside the portfolio I am managing called the Zacks Surprise Trader.
From 150 companies scheduled to report earnings next week, I have locked onto a small handful of standouts predicted to exceed expectations and surge in price.
If you would like to receive our trading signals through the heart of this earnings season, I invite you to look into Surprise Trader ASAP.
New Surprise Stock to Post Monday Morning
Check our live recommendations right now, and be among the first to see the brand new pick I’m adding Monday. You can take advantage of ripples of buying even before the company reports earnings.
Recent recommendations have generated gains like +49.8%, +28.5%, and +39.9% in as little as 4 days.¹
Don't miss your chance to beat Wall Street to the punch and make the most of the potential double-digit price pops.
Bonus Report: Another reason to look into this now is that you are also invited to download our just-released "Early Warning Alert" report. It reveals Stocks to Sell BEFORE They Report Earnings in the Coming Weeks. Our strategy works both ways, and you can use this report to avoid companies that are more likely to report negative surprises from April 14-25.
See our Surprise Trader stocks and “Early Warning Alert” before the deadline - Sunday, April 13 >>
All the best,
Dave
Dave Bartosiak is Zacks' resident earnings surprise expert. He selects stocks and delivers daily commentary for our Surprise Trader portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
Image: Bigstock
Finding Opportunities in The Pullback
No amount of “oversold” was going to make this market bounce. We weren’t being driven by technicals down, though they are great at hammering home just how serious it was out there. The S&P 500 was up 4% at its peak Tuesday, April 8th, and closed in the red. The last time we saw that? October 17th, 2008. Yes, it was that serious.
How did we get there? It’s not the tariffs themselves, rather the uncertainty that this entire conversation is creating. The reason for the uncertainty is the constant evolution of the situation. That’s not an indictment of the strategy. Rather, it’s an evaluation of the market’s assessment of the situation.
Think about the times over the last few weeks when we got a rally. They occurred during times of tariff pauses with clear deadlines and other countries coming to the table for negotiations. In other words, the rallies occur when uncertainty clears up.
A Hopeful Rally
Monday’s rally was built on hopes of countries coming to the table to negotiate as well as a tariff implementation pause. When the tariff pause rumor was debunked, the market came back down. Then EU tariff talks helped it get its footing again.
If you want to navigate through the near-term future of this market keep two things on your mind, levels of uncertainty and liquidity. The Fed and liquidity had taken center stage for so long, now it’s taken a back seat to uncertainty.
Now, I’ve seen a lot of trading days first hand. Wednesday was certainly among the whoppers. It felt like we were on the ropes after Tuesday’s action. That nearly full bearish engulfing left something to be desired. After watching the Asian session before calling it a day, I was looking forward to Wednesday morning. I thought we might have an opportunity. I spent the afternoon and most of the evening gaming scenarios out.
It started with Chinese retaliatory tariffs early, at 7am. The news hit just as the futures markets were making overnight highs. It led to a huge dip in the market and some instant risk-off. It was short-lived though and equities quickly recovered.
I had a feeling we were in for an interesting one, but nowhere near this interesting. Early commentary from Treasury Secretary Bessent was met with some swings. It wasn’t until President Trump posted “It’s a great time to buy” on Truth Social that I thought we had a real chance of seeing something dramatic happen. There was a decent 10-year auction, then BOOM, news of a tariff pause.
Over the edge we went, rocketing higher and putting up numbers you see once every fifteen years or so. In the end, it was the 2nd best day ever for the NASDAQ Composite, and the 3rd best day ever for the S&P 500. The other two were in October 2008. Re-read that if you think we are totally out of the woods. We most certainly are not. However, there is some more certainty surrounding tariffs right now, which the market is cheering.
We were very oversold. Now we have some room to run.
Keep reading . . .
------------------------------------------------------------------------------------------------------
Buy These Stocks BEFORE They Report Earnings
Next week, 150 companies are scheduled to report earnings. What if you could know in advance which few would shock Wall Street by beating earnings expectations and pop in price?
Now you can.
Zacks proprietary "ESP" formula predicts positive earnings surprises with unthinkable 80% accuracy. That doesn't mean we make money 80% of the time, but recent picks were closed for gains of +49.8%, +37.0% and +28.5% in as little as 4 days.¹
What stocks is the system picking today? Find out before doors close to new investors at midnight Sunday, April 13.
See Surprise Stocks Now >>
------------------------------------------------------------------------------------------------------
Trade War in High Gear
There are still some obstacles in our way. The trade war with China looms. The Trump administration may have put the rest of the world on pause, but they have yet to deal with China. Reciprocal tariffs from Beijing were met with even larger tariffs from the US. It’s safe to say that neither side is backing down yet.
China has a few cards up its sleeves. Namely, the $760 billion in US Treasuries it holds. (For perspective, foreign nations hold over $8.5 trillion in T-Notes.) If China dumps their notes on the open market, it puts upside pressure on Treasury Note Yields, which the US is trying to keep under 4.5% as lots of notes roll over.
Opportunities Abound
The great news is that there is still a very bearish sentiment that’s fallen all over Wall Street. Wednesday was a big step in the right direction, but there is still plenty of work to be done. A quick peak at one of my favorite overbought/oversold indicators, the Percent of Stocks Above the 200-Day Moving average reached extremes earlier this week. At one point on Monday, less than 14% of stocks were trading above this key moving average. That means the market was oversold to a point we hadn’t seen since October 2022.
Image Source: TradingView
That turned out to be an incredible opportunity back then to add equity positions. The S&P 500 surged over 60% to all-time highs earlier this year from that point.
This most recent pullback should be seen as one thing, an opportunity.
The Power of the Zacks Rank
Here’s the good news for long-term investors: a lot of great stocks are on sale and we may see more fantastic deals in the near future.
But how do you find stocks that have a real shot at significant outperformance?
The Zacks Rank is a great place to start.
Stocks rated highly by the Zacks Rank have the strongest underlying earnings trends. Buying these stocks on dips can put the odds strongly in your favor. Short-term market fluctuations happen at a much greater frequency than a reversal of an earnings trend. Especially when short-term fluctuations are caused by something like tariffs. That means investors can use them to find stocks that stand to profit – and continue to profit – despite what’s happening with the global political landscape.
Look for Big Wins This Earnings Season
Decades of research show that shares of companies that beat earning expectations are among the most likely to increase in price, regardless of market conditions.
That is why the Zacks research team invested so much time and effort to create a special strategy that detects rare companies that are most likely to both beat earnings and jump in price.
This strategy predicts positive surprises with 80% accuracy, a previously unimaginable feat.
You can see all the stocks turned up by this strategy inside the portfolio I am managing called the Zacks Surprise Trader.
From 150 companies scheduled to report earnings next week, I have locked onto a small handful of standouts predicted to exceed expectations and surge in price.
If you would like to receive our trading signals through the heart of this earnings season, I invite you to look into Surprise Trader ASAP.
New Surprise Stock to Post Monday Morning
Check our live recommendations right now, and be among the first to see the brand new pick I’m adding Monday. You can take advantage of ripples of buying even before the company reports earnings.
Recent recommendations have generated gains like +49.8%, +28.5%, and +39.9% in as little as 4 days.¹
Don't miss your chance to beat Wall Street to the punch and make the most of the potential double-digit price pops.
Bonus Report: Another reason to look into this now is that you are also invited to download our just-released "Early Warning Alert" report. It reveals Stocks to Sell BEFORE They Report Earnings in the Coming Weeks. Our strategy works both ways, and you can use this report to avoid companies that are more likely to report negative surprises from April 14-25.
See our Surprise Trader stocks and “Early Warning Alert” before the deadline - Sunday, April 13 >>
All the best,
Dave
Dave Bartosiak is Zacks' resident earnings surprise expert. He selects stocks and delivers daily commentary for our Surprise Trader portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.