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Yahoo
07-06-2025
- Business
- Yahoo
Veteran analyst says stock market rally not 'real' until this happens
Veteran analyst says stock market rally not 'real' until this happens originally appeared on TheStreet. Investors are feeling good about the stock market's rally from April lows created after the bottom fell out when tariff plans were first announced. Yet as investor emotions show a little more positivity, they are also more vulnerable to the idea that the rebound is nothing more than a bear-market rally, a brief bounce that could go away when the headlines change. The Standard & Poor's 500 Index – which entered the year just under 5,900 -- set a record close at 6,144.15 on February 19 as it reacted to the release of minutes from the Federal Reserve Board's late-January index—the most common proxy for 'the stock market'—had fallen from that level by the time President Trump announced his tariff plans on April 2. This sent the index reeling toward bear-market territory, nearly down 20% from its peak. As tariff plans changed and morphed and were delayed, the market rebounded, recapturing its loss on the year by the middle of May. Since then, however, the stock market has failed to break through to new record levels, and a long-time technical analyst, Willie Delwiche, says stocks will stay stuck in a volatile range—and potentially re-test lows—unless we see a crucial signal that the rally will be lasting. Willie Delwiche runs Hi Mount Research. He is a business professor at Wisconsin Lutheran College and spent more than two decades as an investment strategist at Baird. He has seen rapid rebounds before, and he says they are meaningless without follow-through. In a market with limited bandwidth, investors are caught in the middle of their range of latest AAII Sentiment Survey, released June 4, showed that neutral sentiment – an expectation that stock prices will remain largely unchanged over the next six months – was up this week, to nearly 26%. While bearish sentiment leads the way with more than 40% of investors, the negative and flat sentiment shows investors don't trust the rally wholeheartedly. 'We have seen instances in the past where we've had big drawdowns, then huge rallies that failed just shy of new highs, that then cascade lower months later,' Delwiche said in an interview on 'Money Life with Chuck Jaffe.' 'So, breaking out to new highs would be the best sign of strength in the market. 'New highs are the most bullish thing that stocks can do,' he added. 'And if we see that, it confirms that we are still in a bull market, not just some sort of very protracted, very exaggerated bear-market bounce.' Delwiche says that the market is currently stuck in a wide and volatile range, below the previous peak of nearly 6,200 on the S&P 500, but above its 200-day (long-term) moving average of roughly 5,800. He warned that a breakout to the downside could quickly send the market back to the April lows, particularly if the market takes it as a sign that the rally is over. One positive sign Delwiche points to is the strength of international markets, which hints that the current rally is broader and not entirely based on the Magnificent Seven stocks, the largest of the U.S. giants. Delwiche pointed to data showing that 55% of global markets finished May at new highs, but the United States was not among them. He said that more international markets are making new highs than there are single industry groups of domestic companies trading at peak levels. 'While we talk a lot about what the US is doing, we're also seeing international leadership, international strength, which is something that most investors -- if you look back over the past 10 years -- haven't seen much of at all,' Delwiche said. 'That's encouraging on two fronts. We see global leadership, and then we also see broad participation within the U.S.' Delwiche has plenty of positives to point to based on both technical and fundamental analysis. He noted that the picture is hyper-dependent right now on the risks of the daily news cycle. 'The market is hostage to headlines right now, unlike any point I can remember in my career,' said Delwiche, whose interview aired on the June 6 edition of Money Life. More Experts Fed official sends strong message about interest-rate cuts Billionaire fund manager sends surprising message on trade deficit Hedge-fund manager sees U.S. becoming Greece 'Not that the rest of the world is all unicorns and roses or whatever, but everyone is crowded into the U.S.,' Delwiche said. 'If something has changed in the US from a political perspective or from a news perspective, I think at the margin that makes investors a little less complacent to stick around in the U.S.,' making the market more volatile and sensitive to news. One possible play with the market in a trading range would be gold, which is up nearly 30% in 2025. Delwiche said that, unlike commodities, which have not performed well, gold has not yet exhausted its upside potential. 'If there was a time that you would be interested in gold, this would be the time to have gold in your portfolio. is an absolute uptrend and it is trending higher relative to US stocks. Commodities overall are not holding up well. Gold specifically is and There are periods where you want to have gold and there are periods where you don't want to have gold,' Delwiche said. 'If ever there was a time when you should be interested in gold, this would be it.'Veteran analyst says stock market rally not 'real' until this happens first appeared on TheStreet on Jun 7, 2025 This story was originally reported by TheStreet on Jun 7, 2025, where it first appeared. 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Miami Herald
07-06-2025
- Business
- Miami Herald
Veteran analyst says stock market rally not ‘real' until this happens
Investors are feeling good about the stock market's rally from April lows created after the bottom fell out when tariff plans were first announced. Yet as investor emotions show a little more positivity, they are also more vulnerable to the idea that the rebound is nothing more than a bear-market rally, a brief bounce that could go away when the headlines change. The Standard & Poor's 500 Index – which entered the year just under 5,900 -- set a record close at 6,144.15 on February 19 as it reacted to the release of minutes from the Federal Reserve Board's late-January meeting. Related: Veteran strategist unveils updated gold price forecast The index-the most common proxy for "the stock market"-had fallen from that level by the time President Trump announced his tariff plans on April 2. This sent the index reeling toward bear-market territory, nearly down 20% from its peak. As tariff plans changed and morphed and were delayed, the market rebounded, recapturing its loss on the year by the middle of May. Since then, however, the stock market has failed to break through to new record levels, and a long-time technical analyst, Willie Delwiche, says stocks will stay stuck in a volatile range-and potentially re-test lows-unless we see a crucial signal that the rally will be lasting. Image source: Michael M. Santiago/Getty Images Willie Delwiche runs Hi Mount Research. He is a business professor at Wisconsin Lutheran College and spent more than two decades as an investment strategist at Baird. He has seen rapid rebounds before, and he says they are meaningless without follow-through. In a market with limited bandwidth, investors are caught in the middle of their range of emotions. Related: Jobs report shifts Fed interest rate forecasts The latest AAII Sentiment Survey, released June 4, showed that neutral sentiment – an expectation that stock prices will remain largely unchanged over the next six months – was up this week, to nearly 26%. While bearish sentiment leads the way with more than 40% of investors, the negative and flat sentiment shows investors don't trust the rally wholeheartedly. "We have seen instances in the past where we've had big drawdowns, then huge rallies that failed just shy of new highs, that then cascade lower months later," Delwiche said in an interview on "Money Life with Chuck Jaffe." "So, breaking out to new highs would be the best sign of strength in the market. "New highs are the most bullish thing that stocks can do," he added. "And if we see that, it confirms that we are still in a bull market, not just some sort of very protracted, very exaggerated bear-market bounce." Delwiche says that the market is currently stuck in a wide and volatile range, below the previous peak of nearly 6,200 on the S&P 500, but above its 200-day (long-term) moving average of roughly 5,800. He warned that a breakout to the downside could quickly send the market back to the April lows, particularly if the market takes it as a sign that the rally is over. One positive sign Delwiche points to is the strength of international markets, which hints that the current rally is broader and not entirely based on the Magnificent Seven stocks, the largest of the U.S. giants. Delwiche pointed to data showing that 55% of global markets finished May at new highs, but the United States was not among them. He said that more international markets are making new highs than there are single industry groups of domestic companies trading at peak levels. "While we talk a lot about what the US is doing, we're also seeing international leadership, international strength, which is something that most investors -- if you look back over the past 10 years -- haven't seen much of at all," Delwiche said. "That's encouraging on two fronts. We see global leadership, and then we also see broad participation within the U.S." Delwiche has plenty of positives to point to based on both technical and fundamental analysis. He noted that the picture is hyper-dependent right now on the risks of the daily news cycle. "The market is hostage to headlines right now, unlike any point I can remember in my career," said Delwiche, whose interview aired on the June 6 edition of Money Life. More Experts Fed official sends strong message about interest-rate cutsBillionaire fund manager sends surprising message on trade deficitHedge-fund manager sees U.S. becoming Greece "Not that the rest of the world is all unicorns and roses or whatever, but everyone is crowded into the U.S.," Delwiche said. "If something has changed in the US from a political perspective or from a news perspective, I think at the margin that makes investors a little less complacent to stick around in the U.S.," making the market more volatile and sensitive to news. One possible play with the market in a trading range would be gold, which is up nearly 30% in 2025. Delwiche said that, unlike commodities, which have not performed well, gold has not yet exhausted its upside potential. "If there was a time that you would be interested in gold, this would be the time to have gold in your portfolio. is an absolute uptrend and it is trending higher relative to US stocks. Commodities overall are not holding up well. Gold specifically is and There are periods where you want to have gold and there are periods where you don't want to have gold," Delwiche said. "If ever there was a time when you should be interested in gold, this would be it." Related: Veteran fund manager who predicted April rally updates S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
16-05-2025
- Business
- Yahoo
The Stock Market Just Did Something Never Seen Before, but History Offers a Clue About What Happens Next
The weekly AAII Sentiment Survey has recorded bearish sentiment readings above 50% for 11 consecutive weeks for the first time in history. Pessimism often precedes stock market gains; the S&P 500 has returned an average of 16% during the 12 months following bearish sentiment readings above 50%. Tariffs imposed by the Trump administration have raised the average tax on U.S. imports to its highest level since 1941, and that will likely be a headwind for the stock market. 10 stocks we like better than S&P 500 Index › The American Association of Individual Investors (AAII) conducts weekly sentiment surveys. Participants are asked a single question: Do you feel the direction of the stock market over the next six months will be up (bullish), no change (neutral), or down (bearish)? The results are published every Thursday. Bearish sentiment has topped 50% in 11 consecutive weeks as of May 8. The stock market has never inspired such peristent pessimism at any point since the AAII began conducting surveys in 1987. The previous record was a seven-week stint during the bear market of 1990. There were also five-week stints during the Great Recession in 2008 and bear market of 2022. That puts the stock market in uncharted territory. But history offers a clue about what happens next: The S&P 500 (SNPINDEX: ^GSPC) has typically rocketed higher in the year following bearish sentiment readings above 50%. Here are the important details. The American Association of Individual Investors (AAII) started collecting market sentiment data in July 1987. Bearish sentiment has since topped 50% in only 96 of 1,971 weekly surveys, which is less than 5% of the time. Importantly, 11 of those 96 readings have come this year. That sounds alarming, but sentiment is considered a contrarian indicator because the stock market has historically performed well after periods of heightened pessimism. Put differently, investors frequently become too gloomy in response to negative news. Here's the median return in the S&P 500 over the six-month and 12-month periods following bearish sentiment readings above 50%: Median six-month return: 7%. Median 12-month return: 16%. Here's what that data implies about the present situation: The S&P 500 closed at 5,862 on February 27, which was the publication date of the first AAII survey in 2025 to show bearish sentiment above 50%. The S&P 500 will climb 16% to 6,799 by next February if its performance matches the historical median. That implies about 15% upside from its current level of 5,887 as of May 13. The stock market has been hammered by economic uncertainty created by President Trump's trade agenda. The AAII survey recorded its first bearish sentiment reading above 50% in late February after his administration announced stiff tariffs on goods from China, Canada, and Mexico, as well as duties on aluminum, steel, and auto imports. Bearish sentiment stayed above 50% throughout March and April as President Trump took a more aggressive stance on trade and other countries took retaliatory action. The most surprising development was the slate of "Liberation Day" tariffs the administration unveiled in early April, which included a 10% baseline tax and higher country-specific duties. The president also raised the total tariff on Chinese imports to 145%. Importantly, Trump has walked back several on those tariffs. The country-specific duties were paused for 90 days in early April, and tariffs on Chinese imports were temporarily lowered to about 35% (for 90 days) in early May. Yet, bearish sentiment has remained above 50% because the constant back-and-forth has unsettled investors nearly as much as the tariffs themselves. While stocks have undoubtedly benefited from Trump softening his stance on trade policy in recent weeks, investors should bear in mind the average tax on U.S. is still at its highest level since 1941, according to the nonprofit Tax Foundation. Most economists think those tariffs will raise prices and slow economic growth, potentially to the point of recession. Here's the bottom line: Investors have been persistently pessimistic since late February. Bearish sentiment has exceeded 50% in 11 straight weeks for the first time in history. On one hand, high levels of pessimism are often followed by strong returns in the S&P 500. On the other hand, tariffs still pose a potential threat to the stock market. Investors need to reconcile those opposing views when making decisions. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor's total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Stock Market Just Did Something Never Seen Before, but History Offers a Clue About What Happens Next was originally published by The Motley Fool
Wall Street Journal
07-04-2025
- Business
- Wall Street Journal
The Stock Market's Fear Gauges Point to a Bounce, Not a Bottom
You can receive investing insights in your inbox each weekday by signing up for our new Markets A.M. newsletter here. 'Unprecedented' is an overused word, but it's a handy one for investors. Online searches for it surged just over five years ago, the same week as queries for 'sourdough bread' and 'adopt a pet' marked the pandemic's early days. Wall Street's so-called fear gauge, the Cboe Volatility Index or VIX, also hit an all-time high that week, surpassing its October 2008 record during the global financial crisis. The S&P 500 would go on to a total return of 77% in the following 12 months—one of its best performances ever. After seeing our 401(k)s turn into 301(k)s last week, it is tempting to look for a widely available barometer for when the bottom is in. Investing isn't so simple. Extremes in sentiment are more likely to point to a short-term 'sucker's rally' that serves to crush spirits even more. Take that October 2008 VIX record: Between Oct. 27 and Nov. 6, stocks would bounce by a fifth. Then they lost another quarter over four months. Given the—sorry—unprecedented nature of the trade upheaval, and the fact stocks aren't even in a bear market yet, it is a good bet that coming rallies will be of the sucker's variety. Those still can be lucrative for the speculatively minded, or an opportunity to lighten up on stocks for people who regret not doing so ahead of 'Liberation Day.' Tread carefully, though. One gauge likely to plumb new depths is the AAII Sentiment Survey. Each week for decades, the American Association of Individual Investors has asked members if they are bullish, bearish or neutral. Last week's bearishness was the highest since March 5, 2009, the session before the bear-market bottom. Most responses last week were lodged before the Liberation Day carnage, so a new record is likely. A more timely 'Investor Optimism Index' maintained by Nations Indexes briefly went below one Friday on a scale of 100—a level creator Scott Nations says is 'very, very rare.' Closes below 10 for the options-related measure have indicated the best returns for the S&P 500 over the following 20 trading days. Just don't call what we had a crash, says Nations. Among his four books, two on options math, is 'A History of the United States in Five Crashes.' Trading was wild last week, not discontinuous. His most recent book, 'The Anxious Investor,' which fuses history and behavioral finance, gives an unsatisfying answer about how to handle today's mayhem. As tempting as it is to feel in control, it warns that these are the times we're likely to make the most harmful and irrational decisions. Measures of individual investor returns confirm that less is more. There is a costly gap between how our portfolios do and how they would have done if we set and forgot them. The widest gaps come during the most turbulent months. Even those disciplined enough to sit still will wonder how far this goes and when it ends. The Covid-19 bear market, the shortest in history, probably provides a misleading guide. The government throwing everything but the kitchen sink at it turned sentiment around. This time around, to use the horror-film trope, the call is coming from inside the house. If this becomes a severe bear market then the bottom will come at the point of capitulation when investors are disgusted with stocks. We are just too recently removed from a positive peak in sentiment and AI optimism. As we will probably soon relearn, markets don't go down in a straight line. But they go down a lot more than we might imagine. Write to Spencer Jakab at
