- Bottom forming clearly visible in the US Stock market
- Sell off spree turning into a buyer rally
- Airline and energy stocks getting back on track
- DOW and S&P 500 entering correction market
Whenever there is a storm in the stock market, be it uptrend or downtrend, the behavior of the investors showcase a certain pattern. It is the purchase and selling pattern of the investors or traders that mostly decides where the stock market graph is headed. For those who follow a certain strategy, such situations call for technical analysis of the market. While the moving force is majorly fundamental this time around, the use of technical analysis can further assist the investor to know if their money is in the right place or not.
With the COVID 19, the US stock market has had a steep crash which took away good night’s sleep for numerous traders. However, the question that remained was whether the market is going down any further or not? Well, this surprising behavior in the stock market genuinely shows hopes of the decline being over and the bull market coming shortly.
Investors are on their hunt to bring the Wall Street’s woes to an end. The uncertainty on how the market will behave once the pandemic is over has made it difficult for equity traders to understand where the market is headed. There are signs in the market that the investors are looking beyond the economic slowdown phase and picking stocks right now. This behavior might well indicate that the worst might get over for the Wall Street finally! Such bottom forming even when the pandemic isn’t completely eradicated is one of the best hints at revival the stock market could give.
The worst performing statistics of Russell 1000 US: RUI stocks in the last 12 months went on to become the best performing stock in the same period with 12% in the positives. Such a pattern is exclusive to the US Stock market but it did show up in Europe’s STOXX 600 index! When the worst-performing stocks are bid by the investors, it reflects the fact that the market is slowly on its way to an upward trend.
The stocks in the airline, energy and cruise sector were so badly beaten and the investors have realized this and are coming back to these stocks at this moment. The overselling that was prevalent in the market was a mistake made by the investors and they realize it now. The US Global Jets exchange-traded fund tracks the performance of US airline stocks and it found that there is a drop of 54.7% this year. However, data from the same body show that nearly 16% gains have been recorded only in this week and that is a huge relief.
On the other hand, the DOW Jones Industrial Average and S&P 500 Index gained around 10% – 11% this week. Such positive trending has brought these indices to the correction stage once again after they went deeper into the bear market on March 23.