After breaking through new all-time highs on a seemingly daily basis, the stock market finally started tapping the brakes last week, with a full-on slowdown yesterday. There were a few factors that added to the past few sessions’ declines, but the reality is that the market needed to take a breather and digest its recent gains. Today, we’ll take a look at what this could all mean for you.
The reality is that a pullback in the broader indices was long overdue. The stock market has been hot and heavy this year, with nary a dip until last week. So, the stock market needed to "burp" and digest all of its recent gains. That’s really what’s been happening.
But that doesn’t change the fact that yesterday was a rough day for the markets. At close, the Dow was down over 1,000 points.
This action had a lot to do with the fact that there was selling pressure coming from ETFs. You see, ETFs are shopped in blocks and that happens at around 2:30 in the afternoon each day and a fresh wave of selling coming from them strengthened yesterday’s selloff.
In my opinion, this correction is nothing to worry about and it’s actually a good buying opportunity. It certainly looks like the market is looking for a bottom and while we may get another retest or two, many stocks are still great buys at current levels.
In fact, we remain in a stunning fourth-quarter earnings announcement season. So far, the average S&P 500 stock has reported 8.3% annual sales growth and 14.9% annual earnings growth.
My Emerging Growth stocks, on the other hand, are posting even stronger results from the latest quarter. We had four companies release results last week, and all four topped analysts’ sales estimates. Only two missed earnings forecasts, and without recent expenses related to the tax reform bill, these two companies would have beat earnings estimates, too.
Overall, I expect my Emerging Growth stocks to continue to post better-than-expected results in the weeks ahead. And I look for strong earnings growth, as well as positive guidance, to propel their shares higher. So if you’re interested in discovering the kind of massive growth potential these stocks have, I urge you to join Emerging Growth today.