As trade war fears have dissipated and Wall Street has started focusing its attention on first-quarter earnings results, the broader indices have bounced back strongly over the past week. In fact, yesterday the S&P 500 and Dow were both up about 2.3% since the previous Monday’s close. In today’s blog, we’ll take a look at some of the factors affecting this recent upsurge.
As you know, a lot of the stock market’s gyrations in April, have been related to Wall Street "reacting" first to the headlines and "thinking" later. As a result, unscrupulous short sellers came out of the woodwork to manipulate select stocks, as the financial media made up news to stir up fears and make the stock markets unnecessarily volatile.
Case in point: With the recent trade negotiations, we’ve experienced wild swings over the past few weeks, simply because Wall Street feared a trade war with China. The key word there, though, is “feared.” All of the tariffs so far have been meaningless. Nothing substantial has actually happened yet.
In fact, China’s President Xi Jinping effectively threw cold water on these trade war fears last week. President Xi Jinping promised to slash his country’s import tariffs and protect intellectual property from foreign businesses in China. In particular, the Chinese president implied that the 25% tariffs on U.S.-made vehicles would be cut and that China would respect U.S. intellectual property rights.
Now, with the trade war fears finally diminishing, Wall Street is starting to focus its attention on first-quarter earnings announcement season, and that’s going to be simply phenomenal…
Consider this: The S&P 500 retested its February 8 lows on four separate occasions, and most of the selling pressure is finally exhausted. A lot of the trading volume dried up on the last retest, which means stocks have been moving higher on relatively light trading volume in the past week. So, as trading volume picks up in the upcoming weeks and positive earnings are released, I expect that the kind of fundamentally superior stocks you can find in Portfolio Grader are poised to explode to the upside.
Remember, Portfolio Grader gives you one simple, easy-to-understand A-F rating on over 5,000 stocks. With this rating, you’ll know precisely which stocks in your portfolio are worth buying more of and which are worthy of consideration to get rid of.
But as always, keep an eye out for any A-rated stocks with a dip in their stock prices as well. These are excellent buying opportunities. So, until next time, hang on and enjoy the ride!