Ep. 297 The Interesting Truth Behind Today’s Market Sentiment And How To Find Growth
Investing With IBD
Deep Dive
Why did the market experience a strong post-election bump in 2024?
The post-election bump was driven by a sense of certainty and sector-specific rallies, as investors anticipated policies favorable to certain industries under the new administration.
What is the significance of the Russell 2000 index breaking its 2021 highs?
The Russell 2000 breaking its 2021 highs indicates a strengthening in small-cap stocks, which have historically shown strong performance after making new highs, often rising 10-23% in subsequent months.
Why are small-cap and mid-cap stocks gaining attention in 2024?
Small-cap and mid-cap stocks are participating in the broader market rally, following the lead of mega-cap stocks. The Russell 2000 and S&P Mid-Cap 400 have both reached new highs, signaling a shift in market leadership.
What is the sentiment around gold in 2024, and why is it struggling?
Gold is struggling due to rumors of peace in the Middle East and expectations of a resolution to the Ukraine-Russia conflict, which reduces its appeal as a safe-haven asset. Additionally, gold has not provided consistent signals for profitable trades.
What technical indicators does Jay Woods rely on for market analysis?
Jay Woods uses RSI, MACD, and Bollinger Bands for technical analysis. RSI helps identify overbought and oversold conditions, while MACD and Bollinger Bands provide additional confirmation for his trading decisions.
How does Jay Woods gauge market sentiment without being on the trading floor?
Jay Woods uses indicators like the VIX to gauge market sentiment, which helps him understand fear or euphoria in the market. He also looks at sector rotation and individual stock behavior to assess overall market sentiment.
Why was 2017 a unique year for the stock market despite political uncertainty?
2017 was marked by low volatility and steady gains, with the S&P 500 rising every month. Despite political headlines and uncertainty, the market remained in a secular bull market, driven by sector rotation rather than political events.
What sectors have been leading the market in 2024, and why?
Financials, utilities, and communications have been leading the market in 2024. Financials are up 37.34% year-to-date, utilities are benefiting from the AI and nuclear energy narrative, and communications are seeing strong performance due to sector rotation.
Why are regional banks, or 'stadium stocks,' gaining attention in 2024?
Regional banks, or 'stadium stocks,' are gaining attention due to their sponsorship of sports stadiums and strong technical setups. The KRE index has broken out above levels seen during the 2023 regional banking crisis, signaling a potential recovery.
How does the AI boom compare to the internet bubble of the late 1990s?
The AI boom is different from the internet bubble in that valuations are much more reasonable. For example, Nvidia's PE ratio is under 40, compared to the much higher valuations seen during the dot-com era. The IPO market is also relatively subdued, indicating less frothiness.
Shownotes Transcript