This Rare Losing Streak Points to 16% Upside in 2025
Investors just finished another fantastic year... But they might not remember it that way. U.S. stocks soared. We never saw a correction.
Editor's note: Today, we're turning things over to our friend Brett Eversole...
Regular readers are familiar with Brett. He's an editor over at our corporate affiliate Stansberry Research. And we've often shared his insights on the overall market and specific corners of it here in the Chaikin PowerFeed.
This essay first appeared in Brett's free DailyWealth e-letter last Thursday, January 2. In it, he explains how the decline in stocks last month could be setting up big outperformance ahead...
This Rare Losing Streak Points to 16% Upside in 2025
By Brett Eversole, editor, Stansberry Research
Investors just finished another fantastic year... But they might not remember it that way.
U.S. stocks soared. We never saw a correction. And there was hardly any volatility the entire year.
Still, the good memories might not hold up – because the year ended with a gut punch.
Most stocks spent the month of December falling... a fall that included one of the worst days of 2024.
It was an ugly ending to an otherwise banner year. But you shouldn't give up on stocks yet.
You see, the decline caused a rare setup in the U.S.'s oldest stock index. It's the kind of move that most folks hate to see... But according to history, it isn't a bad thing at all. Instead, it could lead to 16% gains next year.
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When I talk about "the market," I'm usually talking about the S&P 500 Index. It holds the largest 500 U.S. stocks. And that makes it the best broad benchmark for the U.S. stock market.
Still, most folks outside of finance still think of "the market" as a different index... the Dow Jones Industrial Average.
The Dow holds just 30 stocks. But it has a longer history – and more name recognition with mom-and-pop investors.
Being so well known wasn't a good thing last month, though. The Dow fell for 10 straight days in December. Take a look...
Again, it was a tough ending to an otherwise incredible year. The Dow fell 6% over those 10 days. And it was the index's longest losing streak since 1974.
Surprisingly, though, this kind of streak hasn't been a signal to sell stocks throughout history. Instead, it has been fantastically bullish.
To see it, I ran the numbers going back to 1950. And the results are clear. Take a look...
Normally, following the trend is critical in investing. A streak of 10 straight down days should indicate a downtrend. But history shows this setup isn't that simple.
Instead, the Dow has a history of outperforming after these rare setups. The index soared 12% over the next six months and 16.3% in a typical year.
That's massive outperformance. Plus, stocks were up a year later 100% of the time.
Now, it's worth mentioning that this is a rare situation. We've only seen five other examples since 1950. So we don't have a large body of evidence to draw conclusions from. But even given that, this setup is obvious...
Stocks only fall for 10 days straight when folks are darn worried. But when we see so many days of declines, it means prices have fallen too far, too fast. The market is overreacting.
It makes sense that stocks tend to soar after these setups. And I expect we'll see the same thing play out in the months ahead.
U.S. investors had a fantastic 2024. It may have ended with a gut punch – but don't let that sour how you feel going into this year.
According to history, the Dow could jump 16% in 2025. Stocks are set up to keep rising... Don't miss it.
Good investing,
Brett Eversole Editor's note: In his DailyWealth e-letter, Brett and his team explain more than just the day-to-day opportunities they see in the markets. They also share strategies that can help you safely and steadily build a lifetime of wealth.
Like the PowerFeed, you can receive DailyWealth for free in the morning every weekday the markets are open. Learn more and sign up for it by clicking here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.42%
10
10
10
S&P 500
-1.11%
57
255
184
Nasdaq
-1.77%
18
51
31
Small Caps
-0.79%
322
1110
470
Bonds
-1.13%
Energy
+1.09%
0
14
8
— According to the Chaikin Power Bar, Large Cap stocks are more Bearish than Small Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+2.76%
Health Care
+1.59%
Communication
+1.06%
Information Technology
+0.64%
Utilities
+0.5%
Industrials
+0.41%
Financial
+0.02%
Materials
-0.52%
Discretionary
-0.88%
Real Estate
-1.7%
Staples
-1.74%
* * * *
Industry Focus
Dow Jones REIT Services
2
36
63
Over the past 6 months, the Dow Jones REIT subsector (RWR) has underperformed the S&P 500 by -1.78%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 14 slots over the past week.
Indicative Stocks
AIV
Apartment Investment
APLE
Apple Hospitality RE
AMH
American Homes 4 Ren
* * * *
Top Movers
Gainers
MRNA
+11.65%
HCA
+3.8%
FSLR
+3.38%
ENPH
+2.98%
FMC
+2.94%
Losers
PLTR
-7.81%
NVDA
-6.22%
SMCI
-5.68%
TSLA
-4.06%
TTWO
-3.83%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
ACI, JEF
MHK
STZ, MSM
No earnings reporting today.
Earnings Surprises
RPM RPM International Inc.
Q2
$1.39
Beat by $0.05
AZZ AZZ Inc.
Q3
$1.39
Beat by $0.12
AIR AAR Corp.
Q2
$0.90
Beat by $0.06
* * * *
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