Hey, Ross here:
While it’s still too early to tell, there is evidence that this pullback may be over quicker than most traders would expect.
Today’s chart shows some of that evidence.
Chart of the Day
This is the percentage of stocks trading above their 50-day moving average – a gauge for a stock’s medium-term direction.
As you can see, after falling sharply since the beginning of April, this number is showing signs of a sharp rebound.
And it’s not the only one. The percentage of stocks trading above their 200-day moving average – a gauge of longer-term direction – is also staging a similar rebound.
None of this is conclusive – that’s just how it is in the markets.
But it is useful in calibrating our expectations. You can see that for the August–October pullback of 2023, that such sharp rebounds didn’t happen until the rally resumed.
Don’t expect the rally to resume overnight – you’re just setting yourself up for disappointment.
But don’t be surprised when it resumes either.
Just stay prepared. I explain a bit more below.
Insight of the Day
Even after the pullback ends, there will be many left on the sidelines who will only jump back in once it’s too late.
Warren Buffett has a famous quote – only when the tide goes out do you learn who has been swimming naked.
But what happens when the tide comes rushing back in…
And all the doomsayers are still sitting on the beach, too afraid to come back in?
When the pullback ends and the rally resumes…
You don’t want to be stuck on the sidelines while everyone else is enjoying the new rally.
In fact, you want to get back in right before the tide does, because that’s how you extract maximum gains from the rebound.
Earlier this morning, I went live with my War Room members to break down the market in real time and highlight some overlooked opportunities.
Everyone found it valuable – especially now, in the middle of a pullback.
I hold these live sessions every week.
If you want it, just click here to find out more (and I’ll even throw in all the details on my favorite AI stock).
I hope to see you at next Thursday’s War Room session.
Ross Givens
Editor, Stock Surge Daily
