Back to top

View the PFP Archive

Profit from the Pros

Stocks Sold Off For Second Day, Rebound Expected

The sell-off continued yesterday with most of the major indexes off about -2%.

Same story as the day before: profit taking and position squaring after a fantastic quarter, trade tensions with China, and a spike in bond yields.

But also as I said the day before; the pullback is way overdone; while tensions are high with China, there's signs the impasse could soon be broken and lead to resumed trade negotiations; and the spike in bond yields has more to do with China selling $3 billion worth of bonds this week, and not because of recession fears, inflation, or worries the economy is slowing down.

There's no denying the pullback is painful. (Aren't they all?) And the market is now trading where it was at the beginning of July, effectively wiping out all of the gains made since then.

But the economy is even stronger now than back then, and looking better all the time.

True, the trade stand-off with China is worse. But in the meantime, we negotiated new deals with Mexico and Canada, and had productive trade understandings with the EU, Japan and South Korea.

But the tensions with China do not warrant the sell-off we saw. In fact, given those tensions, the IMF still reiterated their 2.9% estimated growth rate for the U.S., and only reduced China's from 6.8% to 6.6%.

That being said, I think the market will soon hit bottom, if it hasn't done so already.

What's the catalyst? Could be anything from selling exhaustion given the severely oversold conditions, to some friendlier tones coming from China, to the start of earnings season which officially starts next week (but unofficially starts today).

So do not get spooked by this market.

This is all a part of trading. The least fun part. But a part of it nonetheless.

And I'm expecting a rebound shortly.

Looking out further, I'm expecting a strong finish to the end of the month, and the end of the year. So make sure you're fully taking advantage of this pullback by getting into stocks at prices you only wished you could have gotten in at before.


Kevin Matras

Executive Vice President, Zacks Investment Research


Urgent Reminder: Zacks' Top 4 Stocks for Q4:

You can still get in early by downloading our just-released Special Report today. These aren't just 4 promising stocks. They were handpicked from hundreds of strong companies by Zacks experts because they present the greatest upside over the next quarter.

1: New partnerships power cloud-based firm to stratospheric growth.
2: Turnaround predicted for stellar firm in unfairly pushed-down industry.
3: Already booming genetics giant leads a medical revolution.
4: Little-known small-cap with last 4 EPS surprises averaging +100%.

Don't miss this Ultimate Four report. Deadline to download is midnight Sunday, October 14.

Most Popular Articles from

5 Top Stocks With a Solid Net Profit Margin

This metric determines the efficiency of a company in deploying its resources, making it the best to measure its profitability. Read More »

Why the Yield Curve Signals Health, not Danger

When current debt-market activity is put in a historical context, we're still far away from any sort of crisis. Read More »

Value & Technical Strategists Discuss Stock Selloff and Inflation

V&T experts offer fresh perspectives on buying the dip, reading the charts, and interpreting the latest CPI read. Read More »

4 Healthcare Stocks Thriving on Venture Capital Funding

After getting off to a rather rocky start this year, the healthcare space has witnessed massive gains in the recent past. Read More »

5 Cheap Small Cap Stocks with Big Growth

Stocks are selling off. Are you ready to look for some bargains? Read More »


Increase Investment Returns with Free Zacks' Portfolio Tracker

Follow your investments easily in one place. Get free email updates that alert you to major events affecting your stocks and funds, including timely recommendation changes, earnings announcements and, most importantly, earnings estimate revisions.

Click to Learn More>>

Bull of the Day: ANGI Homeservices (ANGI)

Angie's List and HomeAdvisor have combined to create a home services powerhouse. Read More »

New Zacks Strong Buys for October 12th

Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. Read More »

Customize Your Profit from the Pros Delivery
Connect with Us:
Contact Info:

Phone: 1.800.767.3771 ext. 9339

Get it on Google Play Get it on Google Play