Investors Are Bracing for a Sequel to Last Month's Pain

Right now, two signals are telling us this downturn may be shorter than most people expect... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Investors Are Bracing for a Sequel to Last Month's Pain By Sean Michael Cummings, analyst, True Wealth --------------------------------------------------------------- Volatility is back... That was the clear message last month. If you had any money in the markets, it felt like you had one reason to worry after another. Oil prices peaked at more than $95 a barrel... Consumer-price inflation made its biggest monthly jump since January... And 10-year Treasury yields soared (which is a sign of falling demand). All these headwinds have crushed the optimism folks started to feel earlier this year. Stocks plunged almost 5% in a month. Now, investors expect the dip to continue. They're going on the defensive... and bailing on riskier assets. But right now, two signals are telling us this downturn may be shorter than most people expect... And stocks could even outperform from here, based on history. Let me explain... --------------------------------------------------------------- Recommended Links: [The Biggest Hit to Your Wealth in More Than a Decade?]( Ten of the world's biggest money managers depend on Joel Litman's market analysis. And until midnight tonight, he's stepping forward to give you the same (frightening) market warning he just shared with them... and a tool he has been waiting 20 years to share with the public. If you're holding stocks, you need to see this. Before midnight, [click here for full details](. --------------------------------------------------------------- [New AI System Predicts Where Any Stock Will Be in 21 Days]( A $1 billion money manager is unveiling a new type of investing that could triple your portfolio, using an AI system that can predict where any stock will trade in 21 days, with 82% accuracy. It recently predicted Netflix within 7 cents! [Click here to learn more and claim free access to the system](. --------------------------------------------------------------- The market is flashing back to the punishing bear market of 2022. We can see it by looking at CNN Business' Fear & Greed Index. This gauge tracks seven different indicators – including volatility, momentum, and demand for "safe" investments, to name a few. Then, it boils these metrics down into a rating from 1 to 100. A rating of 75 to 100 represents extreme greed... And a rating of 1 to 25 indicates extreme fear. Last week, we got a major fear reading. The index fell to 18 on October 3. It was a new one-year low. The last time this index was so beaten up was on October 14, 2022. But here's the kicker... That 2022 low happened two days after the market bottomed. In other words, the last time investors were this fearful, it meant there was nobody left to sell. The Fear & Greed Index is giving us a potential buy signal. And that's not the only "green light" flashing right now. You see, the S&P 500 Index just forged into "oversold" territory based on its relative strength index ("RSI")... The RSI tells us when an asset is running too hot in either direction. When prices rise too far, too fast, it pushes the RSI up past 70... an "overbought" signal. And when prices fall excessively, the RSI sinks below 30... an "oversold" signal. In either case, a reversal tends to follow. The S&P 500 just hit oversold territory for the first time in a year. Take a look... The index fell below an RSI of 30 last week, before reversing back out the next day. That tends to be positive for stocks. You can see that the last oversold signal happened last fall – not long before the 2022 low in the Fear & Green Index. And that signal kicked off the 2023 bull run. Still, I wanted to know what this indicator means for stocks going forward. So I tested every time the S&P 500 has risen out of oversold territory going back to 1990. Specifically, I highlighted every time the RSI dropped below 30 and then rose above it. And buying on this kind of move tended to lead to outperformance. Take a look... The S&P 500 returns about 8% in an average year. But if you buy after stocks exit oversold status, you can beat that performance... After breaking out of oversold dips, the index rose about 6% in three months... 8% in six months... and 13% in a typical year. What's more, after those instances, stocks were up a year later 79% of the time. So this signal has been reliably bullish over the past 33 years. Investors are terrified today. The bad news may seem never-ending. But history suggests you shouldn't join the panic. The next leg up looks to be just around the corner... and all this negative sentiment should fuel the bull run to come. Good investing, Sean Michael Cummings Further Reading Stocks tend to fall in September. In fact, this phenomenon is so well known that it has a name: the "September Effect." This year, the losses were worse than usual – and market breadth was weak. But history shows that weakness could lead to surprising outperformance... [Read more here](. "It's crazy how quickly even the investment 'pros' have thrown in the towel on the stock market," Brett Eversole writes. Money managers recently turned bearish. It was a fast, dramatic shift. In the past, though, similar swings have led to gains – and this signal has a perfect track record... [Learn more here](. Market Notes HIGHS AND LOWS NEW HIGHS OF NOTE LAST WEEK CBOE Global Markets (CBOE)... trading-exchange operator Duolingo (DUOL)... language-learning app Horizon Therapeutics (HZNP)... biopharmaceuticals Costco Wholesale (COST)... membership-only stores Winmark (WINA)... resale stores Abercrombie & Fitch (ANF)... apparel Watsco (WSO)... HVAC equipment Murphy USA (MUSA)... gas stations Construction Partners (ROAD)... roads U.S. Steel (X)... steel NEW LOWS OF NOTE LAST WEEK Northrop Grumman (NOC)... "offense" contractor L3Harris Technologies (LHX)... "offense" contractor Bank of America (BAC)... financial giant Citigroup (C)... financial services PayPal (PYPL)... mobile payments Block (SQ)... cashless payments Bristol-Myers Squibb (BMY)... pharmaceuticals Disney (DIS)... streaming and entertainment Hershey (HSY)... "Global Elite" chocolatier Tapestry (TPR)... high-end accessories PepsiCo (PEP)... soft drinks Sysco (SYY)... food products Kraft Heinz (KHC)... snack foods Clorox (CLX)... cleaning supplies Target (TGT)... big-box retailer 3M (MMM)... manufacturing General Motors (GM)... automaker Advance Auto Parts (AAP)... auto parts --------------------------------------------------------------- [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. 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