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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Down For The Week, But Make Dramatic Rebounds On Friday

Stocks closed mixed on Friday with the Dow and the S&P in the green, while the Nasdaq was in the red.

The S&P briefly fell into bear market territory, intraday, on Friday (down -2.32% at one point, for a correction low of -20.56%), before erasing those losses by the close and finishing up on the day.

For the last 2 weeks, all we heard was how the S&P was on the brink of a bear market. Well on Friday, traders finally pushed the index below the -20% threshold. And once they did, it was essentially crickets. There was no panic. No pandemonium. No further plunge to the downside. There was a modicum of additional selling. But that's about it. And with virtually nobody left to sell, the buyers swooped in and bought.

As I watched it fall below the -20% mark, and then saw the selling just kind of dry up, I remember saying out loud, "is that it?" And sure enough, it was.

By the end of the day, it was clear there were no more sellers to press it, and the rebound gained momentum before finally getting into the plus column within the last few minutes of the day.

Have to say, it was pretty exciting.

Don't get me wrong, the markets have plenty of work to do. The Dow and the S&P are still in correction territory with declines of -15.05% and -18.66% respectively. And the Nasdaq is still in bear market territory with a loss of -29.29%.

Moreover, the Dow notched its 8th weekly loss in a row (longest losing streak in 90 years), while the S&P and Nasdaq recorded their 7th weekly loss in a row (longest losing streak in 21 years).

But if the markets looked oversold before, they look even more oversold now.

And with the sell-off pushing valuations to their lowest level in more than 2 years (April 2020), many stocks are looking like downright bargains.

Let's also not forget, the economy is still growing. That point was reiterated on Friday by St. Louis Fed President, James Bullard, when he said he does not see a recession this year or next, and sees the economy growing by 2.5% to 3% this year.

He qualified his statement saying that could change if there was a "really large shock" to the economy. But outside of that, he sees a "pretty good second half," driven by "strong consumption this year."

So, maybe, maybe, maybe, we finally saw the bottom. (Or not.)

Either way, the market is long overdue for some up days and weeks.

And today would be a great day to get that party started.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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