Be honest with yourself... How are you feeling about the markets right now? Both the S&P 500 Index and the Nasdaq Composite Index officially hit "correction" territory.
This Signal Likely Means the Bottom Is Near
By Vic Lederman, editorial director, Chaikin Analytics
Be honest with yourself...
How are you feeling about the markets right now?
Both the S&P 500 Index and the Nasdaq Composite Index officially hit "correction" territory.
The S&P 500 has moved slightly higher in recent days. But it's still down about 8% from its all-time high last month.
Meanwhile, the Nasdaq remains around 12% below its all-time high in December.
A lot is going on in the world right now as well...
The U.S. is undergoing a dramatic priority realignment. And regardless of how you feel about the politics of it, major changes are underway.
But does it feel like the world is falling apart? Does it feel worse than the first COVID-19 lockdowns? Or how about when the financial world fell apart in 2009?
I would bet, for most of you reading this essay, the markets don't feel anywhere near those extreme events. After all, despite the new tariffs, things are mostly humming along...
Unemployment is roughly 4%. And despite signs of weakening consumer spending, the economy is still in solid shape.
Sure, there are a lot of brewing problems across our economic landscape. But I think many of us can see that we're not at a standstill – and we're nowhere near 2009 or 2020.
If you feel that way, though... you're in the minority.
You see, retail investor sentiment is downright terrible right now.
But as I'll explain, this kind of extreme means that we likely aren't far from a bottom...
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Most Retail Investors Think the Market Will Fall in the Next Six Months
I must admit, I was shocked when I saw that headline...
I couldn't help but think that maybe all those other folks knew something I didn't.
After all, it's obvious to me that the economy is not at a standstill. Yet retail investors aren't just feeling bad about the market. They think it's terrible.
That's clear when we look at the American Association of Individual Investors' ("AAII") Investor Sentiment Survey. Based on this measure, as of last week, slightly more than 59% of retail investors believed the market would fall over the next six months.
Respondents have felt mostly negative since the end of last month. In fact, for the first time in history, "bullish" sentiment came in at less than 20% for three straight weeks.
When it comes to sentiment, that's an extreme. And it should get your attention...
Here at Chaikin Analytics, we don't spend a lot of time on sentiment. But it's a key part of the Power Gauge.
Sentiment from the so-called "smart money" on Wall Street plays a huge role in a stock's movement.
We measure analyst rating trends, earnings trends, and insider activity. And we do all that to get a feel for how the smart money feels about a stock.
But right now, retail investors are the ones feeling particularly extreme. If you don't know, Wall Street calls these folks the "dumb money."
That may be a bit harsh. But the truth is that when this crowd runs in one direction...
The market is usually near a turning point.
We're seeing that today. Retail investors fear that we've reached the end of the world.
Now, I don't have a crystal ball. I focus on data, not wizardry.
But it's obvious that the crowd is feeling downright terrified right now. It's a sentiment extreme. And I know from experience that means we're likely nearing a bottom.
So, sure it feels bad out there today. But don't forget...
Even in the worst markets, investors like us can still find opportunities.
And right now, the crowd is telling us that a big opportunity is right around the corner.
Good investing,
Vic Lederman Editor's note: Thanks to the market's recent downturn, volatility and fear are rising today. And most folks don't know what to do with their money.
Fortunately, Chaikin Analytics founder Marc Chaikin has lived through plenty of turbulent markets during his five decades in the business. And he has called almost all the market's twist and turns over the past several years – including the 2020 and 2022 crashes.
Next Thursday, March 27, Marc is stepping forward with an urgent update for all of our readers. He'll explain what's happening – and detail the ONE move you need to make to prepare.
Marc's special broadcast is FREE to attend. You just need to register in advance right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.93%
2
23
5
S&P 500
+1.09%
40
321
137
Nasdaq
+1.34%
8
71
21
Small Caps
+1.56%
218
1186
497
Bonds
+0.52%
Consumer Discretionary
+1.92%
1
41
8
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are all bearish.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+5.75%
Financial
+3.96%
Industrials
+2.71%
Materials
+2.67%
Utilities
+2.29%
Health Care
+1.6%
Information Technology
+1.53%
Real Estate
+1.21%
Communication
+0.23%
Consumer Staples
+0.06%
Consumer Discretionary
-0.16%
* * * *
Industry Focus
Oil & Gas Exploration & Production Services
13
30
10
Over the past 6 months, the Oil & Gas Exploration & Production subsector (XOP) has underperformed the S&P 500 by -1.73%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors and has moved up 6 slots over the past week.
Top Stocks
XOM
Exxon Mobil Corporat
AR
Antero Resources Cor
CTRA
Coterra Energy Inc.
* * * *
Top Movers
Gainers
BA
+6.84%
SMCI
+5.8%
RCL
+5.77%
CZR
+5.66%
APH
+5.58%
Losers
INTC
-6.94%
PGR
-3.53%
TECH
-3.09%
WAT
-2.83%
SYY
-2.65%
* * * *
Earnings Report
Earnings Surprises
PGR The Progressive Corporation
Q4
$4.08
Beat by $0.52
WSM Williams-Sonoma, Inc.
Q4
$3.28
Beat by $0.34
GIS General Mills, Inc.
Q3
$1.00
Beat by $0.04
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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