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Yahoo
5 days ago
- Business
- Yahoo
The S&P 500 Just Did Something Unseen in 35 Years. It Could Signal a Big Move in Stocks Over the Next 12 Months.
The stock market has been extremely volatile in 2025 as trade policies and economic uncertainty shake investors. The recent market rally could give some investors confidence going forward. Investing in the current market comes with risks, but history is on your side. 10 stocks we like better than S&P 500 Index › The stock market has been on a roller coaster ride since the start of the year. After a rocky January, when AI stocks got dinged by DeepSeek's news of a cheaper reasoning model, the S&P 500 (SNPINDEX: ^GSPC) returned to an all-time high in February. Then, President Trump's tariff discussions put many investors on edge as he announced plans for taxes on imports from Mexico, Canada, and China. That went into overdrive at the start of April, when Trump enacted significantly higher-than-expected tariffs on practically every country in the world. The announcement produced one of the worst two-day market crashes in history. But after walking back the implementation of most of the tariffs (for now) and investors acclimating to this uncertain environment, the stock market has mostly recovered. In fact, the S&P 500 index just did something in May for the first time since 1990, and historically, it signals a big move in stocks over the next 12 months. Here's what investors need to know. The S&P 500 climbed 6.15% in the month of May. That's the first time the benchmark index climbed more than 6% in the month of May since 1990 and just the seventh time May's performance has topped 5% since 1985, according to Carson Investment Research's Ryan Detrick. While investors who missed the chance to buy the dip in April may be bemoaning the stock market's rapid comeback, history suggests they may still have an opportunity to buy. In each of the last six instances when the S&P 500 return topped 5% in May, it went on to produce an average return of nearly 20% over the next 12 months. So much for "Sell in May and go away." In fact, Detrick's data shows that none of the six instances ended with a negative return over the next 12 months despite the market's penchant for reverting to the mean. That said, investors who bought after the 9.2% rally in May of 1990 did have to sit through a three-month period from July through October when stocks fell almost 20%. Ultimately, however, those investors saw the index climb about 8% for the year after the May rally. The month of June is already off to a strong start as of this writing. But if investors can expect 20% gains in the index for the next year, there's still a lot more growth to come. While Detrick's data shows the market tends to keep climbing higher after abnormally strong Mays, investors shouldn't put too much weight into the historical data. First of all, the sample size is minuscule. Six data points over 40 years don't give enough information for the basis of a financial decision. Second of all, every market is different. The 1990 rally was fueled by falling interest rates. Indeed, the rate on the 30-year Treasury bond fell all the way from 9% to 8.6%. By contrast, the 2025 rally was fueled by easing trade tensions. In both cases, many investors expressed concerns about market valuations amid the rally. Indeed, the CAPE ratio returned to its high levels, and stocks look even more expensive after analysts adjusted their forward earnings expectations lower. Still, it's unlikely the next 12 months will look anything like the 12 months from June of 1990 through May of 1991. As such, individual stock investors should remain vigilant in their efforts to find good investments. As investor Peter Lynch said, "Buy the right stocks at the wrong price at the wrong time and you'll suffer great losses." But if you find a good opportunity, history suggests you could end up with a strong return over the next year. For passive investors, you're playing a different game. There's no need to pay attention to history. You should be fully invested in your index fund of choice at all times. Trying to time the market based on recent results is a surefire way to underperform the index over the long run. May's rally was a welcome reprieve from the crash we saw in April. History suggests more strong months may be ahead, but I caution investors from reading too much into how similar May rallies have played out in the past. 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% 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 June 2, 2025 Adam Levy 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 S&P 500 Just Did Something Unseen in 35 Years. It Could Signal a Big Move in Stocks Over the Next 12 Months. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-05-2025
- Business
- Yahoo
This Stock Market Indicator Has Been 100% Accurate Since 1957. It Signals a Big Move in 2025.
The U.S. stock market has performed poorly under President Trump, but it recently triggered a bullish indicator known as a Zweig Breadth Thrust (ZBT). The ZBT flashes when the stock market rapidly builds upward momentum, and positive signals have been seen just 16 times since 1957. The S&P 500 has always moved higher during the next six months and the next year after positive ZBT signals, with an average 12-month return of 24%. The S&P 500 (SNPINDEX: ^GSPC) declined 8% during President Trump's first 100 days in office, the index's worst performance under any administration in more than 50 years. In particular, investors are worried about how changes in U.S. trade policy will affect the economy, though the president's remarks about possibly removing Federal Reserve Chair Jerome Powell also caused consternation. Nevertheless, the U.S. stock market recently triggered a technical indicator known as the Zweig Breadth Thrust (ZBT). Positive ZBT signals have been seen just 16 times since the S&P 500 was created in 1957, and the index has always moved higher during the next six months and the next year. In other words, the ZBT indicator has been 100% accurate. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Here's what investors should know. The Zweig Breadth Thrust (ZBT) is a technical indicator named for the late fund manager Martin Zweig. A ZBT signal occurs when the percentage of advancing stocks on the New York Stock Exchange (measured as a 10-day moving average) increases from less than 40% to more than 61.5% in 10 trading days. In other words, the indicator flashes following a very abrupt ramp in upward momentum in the stock market. As mentioned, U.S. stocks have only triggered ZBT signals 16 times since the S&P 500 was created in 1957, and the index has always generated a positive return during the next six months and the next year, according to Carson Investment Research. The average return for each time period is as follows: 6-month return: 16% 12-month return: 24% Importantly, the S&P 500 essentially trades at the same level on April 28 as when the ZBT signal started flashing on April 25. So, the index will advance approximately 16% by October 2025 and 24% by April 2026 if its performance matches the historical average. Interestingly, another stock market indicator sounded a bullish alarm on April 24. That was the third straight trading session in which the S&P 500 returned more than 1.5%. The index has only strung together three daily gains exceeding 1.5% on nine occasions since 1957, and it has always generated a positive return in the next year, according to Carson Investment Research. In fact, the S&P 500 has returned an average of 21% during the year following three straight trading days with gains above 1.5%. In this situation, the index closed at 5,485 on April 24, so history says it will advance 21% to 6,637 during the next year. That implies 20% upside from its current level of 5,529. Unfortunately, while both stock market indicators I've discussed imply significant upside in the S&P 500 in the coming months, the current situation may not fit the historical pattern. I say that because U.S. trade policy has undergone dramatic changes under President Trump for which there is little precedent. To elaborate, despite the 90-day pause on so-called reciprocal tariffs, the duties imposed to date have already raised the average tax on U.S. imports to roughly 20%, the highest level since the early 1900s. But the economy is much bigger today, which means we are seeing trade policy upheaval on an unprecedented scale. Nobel-winning economist Paul Krugman called it "the biggest trade shock in history." Importantly, JPMorgan Chase strategists estimate the effective tariff rate will land between 10% to 20% after the Trump administration has finalized negotiations with foreign trading partners. Even the low end of that range represents the most aggressive trade policy since the 1940s, which makes anticipating the impact on the stock market very challenging. Economists generally agree that tariffs increase consumer prices, slow economic growth, give disincentives to innovation, and lower living standards. In other words, they are bad news all the way around. For that reason, investors should remain cautious in the current market environment. That means buying only high-conviction stocks -- those whose earnings are likely to be materially higher in five years -- and investing money at a measured pace. 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 $598,818!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $666,416!* Now, it's worth noting Stock Advisor's total average return is 872% — a market-crushing outperformance compared to 160% 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 April 28, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy. This Stock Market Indicator Has Been 100% Accurate Since 1957. It Signals a Big Move in 2025. was originally published by The Motley Fool
Yahoo
29-04-2025
- Business
- Yahoo
The Market Just Did Something for Only the 20th Time Since World War II, and History Says There's a 100% Probability of Where Stocks Go Next
At the Fool, we preach the notion of Foolish Investing. This involves regular and dispassionate additions to your stock portfolio on a regular basis, a concentration in high-quality companies, and a long-term investing mindset. But hey, looking at technical indicators to supplement our fundamental investing ethos couldn't hurt either, could it? Technical indicators may also be especially valuable in times like today, as investors debate whether the market has hit a bottom earlier this month after a brutal stock market correction over the past couple months. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Fortunately for bullish investors, one technical indicator was just achieved late last week, and it has a 19-for-19 track record of predicting higher markets within six months and one year out. On Thursday, April 24, an indicator known as the Zweig Breadth Thrust was triggered for the S&P 500 index (SNPINDEX: ^GSPC). This technical indicator was developed by investor Martin Zweig, author of a famous investing tome Winning on Wall Street in 1986. The indicator is calculated by tabulating the change in the 10-day exponential moving average of advancing stocks against the total number of stocks in an index over a 10-day period. In the case of the Zweig Breadth Thrust, the indicator is triggered when the index, in this case the S&P 500, goes from below a 40% 10-day EMA of advancing stocks to a greater than 61.5% proportion of advancing stocks within a span of 10 trading days. The indicator may seem complex and somewhat arbitrary, but if you think about it, the concept is simple. The rapid change in the number of advancing stocks indicates that a falling market with broad-based weakness has rapidly switched to a market with upwards momentum, but which is not yet "overbought." According to Ryan Detrick citing Carson Investment Research and Ned Davis Research on X, a Zweig Breadth Thrust was achieved last Thursday. This is the first ZBT since November of 2023, and just the 20th such instance since World War II. The indicator is very rare, as you can tell, with the extreme bearish-to-bullish sentiment change happening just once every four years on average. As you can see below, when a ZBT does occur, stocks usually perform extremely well in the following period: Following the previous 19 Zweig Breadth Thrust triggers going back to 1943, the S&P 500 was higher one month later 95% of the time, higher three months later 79% of the time, and always higher six and twelve months later, with median six and 12-month returns of 13.2% and 24.8%, respectively. Needless to say, those are quite healthy returns over such a time period. Thus, if one has been sitting on one's hands waiting for more clarity on the tariff controversy and/or potential recession before buying stocks, this indicator may give you reason to put at least some of that idle cash to work in your favorite stocks right now. While the Zweig Breadth Thrust does have a perfect track record, it's also not a foolproof guarantee. Remember, technical indicators are just measuring movements in stocks, which serve as a barometer for investor sentiment. Technical indicators don't predict global trade wars spiraling out of control or stagflationary recessions, which are still possibilities. Looking back at the prior examples, none of these breadth thrusts happened as a bear market was still unfolding, but rather after months-long bear markets had already occurred. The examples from the mid-1970s, for instance, happened after a dreadful bear market in 1973-1974. The example from 2009 happened after the massive six-month drawdown beginning in October 2008, which was the beginning of the Great Financial Crisis. So, if we are going into a recession later this year as the result of the administration's tariff policies and a still-tight Federal Reserve, it's possible the ZBT won't work this time around. Right now, Wall Street analysts give a recession about even odds. But the recent action in stocks points to investors apparently disbelieving we will have an actual recession. Investors may be anticipating a mere "growth scare," as what occurred before the January 2019 ZBT. That ZBT was triggered after the late 2018 19% stock market correction that stopped just short of a full-on bear market, but which ultimately didn't lead to a recession. Perhaps since that scenario occurred during Trump's first term under similar circumstances to today, investors are dusting off a similar playbook. But this time, there is more uncertainty. Although the administration did give a 90-day "pause" on tariffs for trade negotiations to take place, we still don't know whether these deals will come to pass. Moreover, even if they do, the administration is still likely to maintain the 10% universal tariffs on most goods from most countries. So even in a best-case scenario where many trade deals are consummated, tariffs will still probably still be higher than they have been in the past. So while the Zweig Breadth Thrust is a very positive sign that investors believe trade deals will be coming and recession will be avoided, neither of those conclusions is a certainty. Overall, it's best to stick with a steady and dispassionate investing plan by adding to your portfolio in set allocations at steady intervals, rather than trying to guess where a market bottom may be... or whether it's already happened. 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 $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $680,390!* Now, it's worth noting Stock Advisor's total average return is 872% — a market-crushing outperformance compared to 160% 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 April 21, 2025 Billy Duberstein and/or his clients have 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 Market Just Did Something for Only the 20th Time Since World War II, and History Says There's a 100% Probability of Where Stocks Go Next was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
30-03-2025
- Business
- Yahoo
Is It Smart to Buy Stocks After the S&P 500 Falls Into a Correction? History Offers a Clear Answer.
The last month has been tough for stock investors. The benchmark S&P 500 (SNPINDEX: ^GSPC) index fell four weeks straight starting in mid-February, pushing it briefly into correction territory. While stocks have recovered somewhat from the fall, the factors driving that rapid decline in prices may still leave some lingering uncertainty for investors. Investing during a correction is tough. Once stocks start going down in price, it feels like momentum will take over and keep pushing shares lower. Bounces like the one we've seen recently could prove fleeting as markets remain uncertain about the future. That seems especially relevant in the current market, given how fast the sell-off occurred and that it was triggered by confusing trade policies that seem to change day to day. But buying stocks when the S&P 500 enters a correction has historically turned out to be a great opportunity for investors. Despite the risk of stocks declining further, bringing on a bear market, the odds are definitely on the side of the buyers. Since World War II, there have been a total of 48 corrections of at least 10% in the S&P 500. That works out to about one every 20 months. Those 48 corrections only fell into bear market territory (down at least 20%) 12 times, according to data from Carson Investment Research. From a historical standpoint, the odds are good that the current correction won't continue falling to that point. So, the downside risk from here looks rather muted. But what's more interesting is that buying right when stocks pass the threshold to be marked a correction has historically led to some very strong results over the next few months. Since 2008, the S&P 500 fell into correction territory 15 times, according to Dow Jones Market Data. In all but two of those cases, stocks were higher a year later. In fact, 60% had recovered within three months. That makes seizing the opportunity when stocks fall very important. The median one-year return of the S&P 500 after it enters a correction since 2008 has been 18.1%. In comparison, the S&P 500 has averaged a return of 9.4% per year over the same period. So, investing while stocks are down is usually a winning formula to outperform. While the average returns after a correction are very strong, it's important that you don't try to time the market and wait for the correction to come before putting your cash to work in stocks. As famous investor Peter Lynch said, "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves." The S&P 500 can go a long time between corrections. The average is 20 months, but they can often come in quick succession in volatile markets. That means investors could end up waiting years for a pullback in stocks -- years when the only thing stocks do is go up in value. The lost opportunity of sitting on the sidelines is far greater than the gain you could make from timing an investment perfectly at the bottom of the market. So, while you shouldn't be afraid of investing going into a correction, you also shouldn't be afraid to invest as stocks move higher. That's important because stocks have already recovered significantly. The S&P 500 trades just under 7% off its all-time high as of this writing after a solid bounce back. You shouldn't wait for prices to fall back down again. They might never again reach the lows we saw a few weeks ago. A key strategy for many investors is to maintain a watchlist of companies you find compelling, but whose stocks don't present the value needed to invest in them right now. When the market falls into a correction, those stocks could end up falling to a price where it makes sense to buy them. Don't wait. When the stock price meets your valuation, it's worth buying. Growth stocks will often fall further than value stocks in a correction, which could create a great opportunity to buy some of the best-performing stocks that have seemed too pricey recently. Indeed, the most recent correction saw big-tech growth stocks, particularly semiconductor companies, fall significantly amid fears about potential tariffs against Taiwan (home of the largest chip manufacturer in the world). But long-term investors may have a good opportunity to buy some of those stocks right now. For those who don't have the time for or interest in researching individual companies and stocks, there's nothing wrong with buying a broad-based index fund. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is popular for a reason. It's simple, it keeps expenses low, and it can perform well above average compared to more active strategies. However you choose to invest, you should see a correction in the S&P 500 as an opportunity to buy more of your favorite stocks and ETFs. Sitting on the sidelines out of fear has been a bad strategy throughout history, and particularly over the last 17 years. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $284,402!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,312!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $503,617!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 24, 2025 Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy. Is It Smart to Buy Stocks After the S&P 500 Falls Into a Correction? History Offers a Clear Answer. was originally published by The Motley Fool
Axios
17-03-2025
- Business
- Axios
Bessent's market math
Treasury Secretary Scott Bessent broke with orthodoxy Sunday when he said corrections in stocks were "healthy" and an antidote to "euphoric" market action. The big picture: Over the long run, he's not necessarily wrong. What they're saying: " I've been in the investment business for 35 years, and I can tell you that corrections are healthy. They're normal. What's not healthy is straight up, that you get these euphoric markets. That's how you get a financial crisis," Bessent told NBC's "Meet the Press" Sunday. Zoom in: Corrections, or a 10% decline in the market from its recent peak, are pretty common. They've happened dozens of times in the S&P 500 in recent decades, most recently starting last Thursday. Between the lines: Since World War II, such corrections have only deteriorated into bear markets (a 20% decline) about a quarter of the time, Carson Investment Research's Ryan Detrick noted on X. In other words, more often than not, the market bounces back. By the numbers: In a correction, on average the market takes five months to fall from peak to bottom, and then four months to bounce back, per Clearnomics data shared by Covenant Wealth Advisors. After that, markets tend to rise strongly. On average, between 1997 and 2020, stocks were up 32% one year after a correction, per data from Gateway Financial Advisors. The bottom line: Past performance is no guarantee of future results — but it may be a reason to worry a little less.
