For Immediate Release
Chicago, IL – November 18, 2024 – Today, Zacks Investment Ideas feature highlights Nasdaq 100 Index ETF QQQ, Tesla TSLA, Coinbase COIN, MicroStrategy MSTR and Root ROOT.
Hawkish Powell Shakes Stocks: What's Next?
Powell’s Hawkish Comments Shake Equities
Ten days after the election, the sugar high and animal spirits appear to be finally wearing off. Tech stocks and the Nasdaq 100 Index ETF finally encountered some heavy selling pressure after comments from Federal Reserve Chairman Jerome Powell earlier in the week. Powell said, “The economy is not sending signals that the U.S. central bank needs to be in a hurry to lower interest rates.”
Investors must understand that markets are driven by liquidity, especially from the Federal Reserve. Nonetheless, considering the roaring rally since the presidential election, Powell taking the foot off the dovish gas pedal is not surprising. With stocks up 5% last week, some profit-taking is expected. Below are 5 more reasons stocks will likely to find support:
1. Technical Confluence Zone
The price action illustrates that QQQ is retreating to a high-probability buy zone, which includes a retest of the breakout and $500 round number, a daily price gap fill, and the rising 50-day moving average.
2. OPEX
Friday is options expiration. Often, stocks trade funky on options expiration days as traders reposition.
3. Healthy Breadth Under the Hood
The majors sometimes tell a partial story regarding market health. In order to get the full story, market participants must check breadth (participation). Though the major indices faded hard, only ~60% of stocks were lower for the session. Though markets were down, leading stocks like Tesla, Coinbase, MicroStrategy and Root were up.
4. Dramatic Sentiment Shift
This week, the “CNN Fear & Greed” indicator showed that sentiment plunged from “Greed” to “Neutral” levels. Savvy investors use sentiment as a contrarian indicator.
5. Seasonality
Historical seasonality suggests that markets tend to retreat into Thanksgiving week before rallying into year-end.
Bottom Line
Friday’s market swoon may seem intimidating on the surface. Nevertheless, several pieces of evidence, including the QQQ chart, sentiment, and seasonality suggest that the downside will be limited.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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See Stocks Now >>Tesla, Inc. (TSLA) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
