U.S. Stocks Just Fell 'Too Far, Too Fast'

Stocks recently fell too far, too fast. But according to history, the worst is likely already over... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] U.S. Stocks Just Fell 'Too Far, Too Fast' By Brett Eversole --------------------------------------------------------------- Investors were just starting to get bullish again... U.S. stocks staged an unbelievable rally from their October 2023 low to their recent high in March. The S&P 500 Index was up an incredible 28% in five months. Then, the past month put that optimism to bed... The Wall of Worry is back at the forefront of investors' minds. And it's out in full force. Stocks have dropped as much as 5% from last month's high. Concerns over higher interest rates, hotter-than-expected inflation, and renewed worries about global conflicts have everyone wondering if this is the start of a larger decline. The fall so far wasn't much. But it's already extreme based on one measure. According to history, though, that means we're likely past the worst... And we could see 14% upside over the next year. Let me explain... --------------------------------------------------------------- Recommended Links: ['The Greatest Legal Transfer of Wealth in Human History']( This year, a crisis could rip the financial markets in two... yet nobody sees it coming and nobody is warning you. However, Porter Stansberry says, despite the dangers ahead, this could be the greatest wealth-building opportunity of your lifetime. While millions of unprepared people will be on the losing side of this transfer... if you own the right investments, you could see significant returns. Porter tells you what to buy, [right here](. --------------------------------------------------------------- [May 1 Warning]( This 24-year market veteran's warning is already coming true. What's about to happen is worse than anything AI can do to your money. [Get the details here](. --------------------------------------------------------------- A 5% decline is hardly worth mentioning. But the fact that it has brought bearishness out of the woodwork is telling. More important, the worst is likely over already. We can see this based on the relative strength index ("RSI") for the S&P 500. The RSI looks at recent price action and determines if an asset has gone too far, too fast in either direction. RSI readings range from 0 to 100. A reading of 70 or higher is considered "overbought." In that case, the asset is running hot, and we should expect prices to fall. On the other end, a reading of 30 or less means the asset is "oversold." That's a sign that the selling has gone too far... And prices tend to recover after hitting those levels. We haven't hit a reading below 30 yet. But the S&P 500's RSI fell as low as 31.3 recently. Take a look... Stocks have nosedived in recent weeks. They went from rising almost every day to falling almost every day. As a result, the RSI dropped to its lowest level since late last year. And it was down far enough to say one thing... The recent sell-off has gone too far, too fast. And a rebound is likely from here. History shows the pattern at work. To see it, I looked at each new RSI reading of 31.3 or lower over the past 15 years. That low has happened 14 other times, or roughly once a year. And if you had bought at those moments, you would have done darn well in the months ahead. Check it out... The past 15 years have been an incredible time for investors. Starting near the 2009 bottom, the S&P 500 has since risen 12.7% per year. But you could have done even better buying when stocks hit oversold levels like today's... Similar setups led to 8.6% gains in six months and 13.8% gains in the next year. Plus, stocks were higher a year later 92% of the time... So the odds of future profits are firmly in our favor right now. This is a tough pill to swallow when stocks are falling for the first time in a while. But if your reaction is to look for reasons to sell, just remember... that's the Wall of Worry in action. Nothing has changed in the past month. History shows that staying bullish is the best move. And with stocks falling too far, too fast, a recovery is likely in the months ahead. Best of all, that recovery already appears to be underway. Stocks made a strong rebound last week. And we can expect that to continue in the months to come. Good investing, Brett Eversole Further Reading Stocks just jumped 25% in six months... with two consecutive quarters of double-digit gains. This is an incredibly rare setup for investors. And according to history, it's a good reason to stay bullish right now... [Read more here](. You don't need perfect timing to win big in the market. Sure, buying at the bottom and selling at the top can deliver solid returns. But with the right time horizon, you can still build great wealth – even if you buy at the "wrong" times... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. 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