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Zacks Investment Ideas feature highlights: DIA, QQQ and SPY
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For Immediate Release
Chicago, IL – April 12, 2024 – Today, Zacks Investment Ideas feature highlights Dow Jones Industrial Average (DIA - Free Report) , Nasdaq 100 ETF (QQQ - Free Report) and the S&P 500 Index (SPY - Free Report) .
Equity Pullback: Garden Variety or Long Term (5 Data Points to Watch)
U.S. equities are experiencing their first pullback of any substance in 2024 after a hotter-than-expected Consumer Price Index (CPI/Inflation) reading. Below are five reasons the pullback is likely to be a short-lived "garden variety" correction, including:
Put-to-Call Ratio Spikes
The put-to-call ratio is a tool used by Wall Street traders to gauge options activity. Typically, analysts look for extremes and fade the crowd in a contrarian manner. A spike in call buying volume suggests that investors are too optimistic, while a spike in put buying implies that market participants are too pessimistic.
X (formerly Twitter) user Jason Goepfert (@jasongoepfert) observed yesterday that the Dow Jones Industrial Average experienced one of its highest put-to-call readings in a decade. Despite the relatively mild correction in equities, investors are fearful and are rushing to protect their portfolios.
However, the put-to-call ratio is not only signaling a short-term rush to protection, it's also triggering a signal that has historically led to bull market trends. Seth Golden (@SethCL) explains that the "1-yr moving average of Put/Call Ratio (bottom panel) turned lower in April of 2023. History suggests the trend should continue through year-end, providing a favorable backdrop for equities (top panel), within a lower-volatility regime."
CNN Fear & Greed
Another sign that investors have one foot out the door and are tepidly investing is the CNN Fear & Greed Indicator. Fear/Greed combines seven market indicators into a composite sentiment indicator ranging from "Extreme Greed." Sentiment has plunged from "Greed" to "Neutral" (the most bearish reading since November) despite the relatively subdued, inflation-induced retreat in equities this week.
Price Action: Innocent Until Proven Guilty
When it comes to investing, I am a firm believer in trusting the trend until proven otherwise (that's because trends often persist longer than most anticipate). As Ryan Detrick of Carson Investment Research proclaims, "2024 is the Rocky Balboa market. When the S&P 500 falls 0.75% or more, the next day is bouncing back more than anytime in history. Yes, long way to go in 24' but really shows the resilience so far in 24'."
Key Moving Averages Contain Trend
In bull markets, investors should buy pullbacks to key moving averages until their hands get caught in the proverbial "cookie jar." The Nasdaq 100 ETF and the S&P 500 Index are each testing their rising 10-week moving averages for the first time in 2024 – a level likely to find buyers.
Net New Highs Show Bulls Remain in Control
The number of stocks making net new highs has overwhelmed the number of stocks making net new lows – a hallmark of a healthy bull market. Equities are unlikely to unravel unless this trend breaks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: DIA, QQQ and SPY
For Immediate Release
Chicago, IL – April 12, 2024 – Today, Zacks Investment Ideas feature highlights Dow Jones Industrial Average (DIA - Free Report) , Nasdaq 100 ETF (QQQ - Free Report) and the S&P 500 Index (SPY - Free Report) .
Equity Pullback: Garden Variety or Long Term (5 Data Points to Watch)
U.S. equities are experiencing their first pullback of any substance in 2024 after a hotter-than-expected Consumer Price Index (CPI/Inflation) reading. Below are five reasons the pullback is likely to be a short-lived "garden variety" correction, including:
Put-to-Call Ratio Spikes
The put-to-call ratio is a tool used by Wall Street traders to gauge options activity. Typically, analysts look for extremes and fade the crowd in a contrarian manner. A spike in call buying volume suggests that investors are too optimistic, while a spike in put buying implies that market participants are too pessimistic.
X (formerly Twitter) user Jason Goepfert (@jasongoepfert) observed yesterday that the Dow Jones Industrial Average experienced one of its highest put-to-call readings in a decade. Despite the relatively mild correction in equities, investors are fearful and are rushing to protect their portfolios.
However, the put-to-call ratio is not only signaling a short-term rush to protection, it's also triggering a signal that has historically led to bull market trends. Seth Golden (@SethCL) explains that the "1-yr moving average of Put/Call Ratio (bottom panel) turned lower in April of 2023. History suggests the trend should continue through year-end, providing a favorable backdrop for equities (top panel), within a lower-volatility regime."
CNN Fear & Greed
Another sign that investors have one foot out the door and are tepidly investing is the CNN Fear & Greed Indicator. Fear/Greed combines seven market indicators into a composite sentiment indicator ranging from "Extreme Greed." Sentiment has plunged from "Greed" to "Neutral" (the most bearish reading since November) despite the relatively subdued, inflation-induced retreat in equities this week.
Price Action: Innocent Until Proven Guilty
When it comes to investing, I am a firm believer in trusting the trend until proven otherwise (that's because trends often persist longer than most anticipate). As Ryan Detrick of Carson Investment Research proclaims, "2024 is the Rocky Balboa market. When the S&P 500 falls 0.75% or more, the next day is bouncing back more than anytime in history. Yes, long way to go in 24' but really shows the resilience so far in 24'."
Key Moving Averages Contain Trend
In bull markets, investors should buy pullbacks to key moving averages until their hands get caught in the proverbial "cookie jar." The Nasdaq 100 ETF and the S&P 500 Index are each testing their rising 10-week moving averages for the first time in 2024 – a level likely to find buyers.
Net New Highs Show Bulls Remain in Control
The number of stocks making net new highs has overwhelmed the number of stocks making net new lows – a hallmark of a healthy bull market. Equities are unlikely to unravel unless this trend breaks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.