HomeMost PopularInvestingThe Bull Case for Equities: 5 Charts Investors Should See

The Bull Case for Equities: 5 Charts Investors Should See

Actionable Trade Ideas

always free

Curious about what the market will do next? Look no further than the charts. Charts are a powerful tool that showcase the fundamental principles of supply and demand. Here are 5 must-see charts that suggest the market may be closer to a bottom than you think:

CNN Fear & Greed Index

The CNN Fear & Greed Index measures investor sentiment in the US equity market. It takes into account various factors such as market trend, stock price strength, trading volume, and safe-haven demand. Based on these metrics, CNN assigns a score from 0 to 100, with 0 indicating extreme fear and 100 indicating extreme greed.

Spin: The Fear & Greed Index can be used as a contrarian indicator. Currently, the index is at an extreme greed level and at its lowest point in 2023, which could suggest a potential year-end rally for bulls.

Zacks Investment Research
Image Source: CNN

The US Dollar

An overly strong US dollar can negatively impact US equities. For instance, a strong dollar can hurt American exporters by increasing the cost of US goods and services, reduce the profits of US-based multinationals, and discourage foreign investment in US equities.

Spin: The US Dollar Index (DXY) and the Invesco USD Index Bullish Fund ETF (UUP) have experienced eleven straight weeks of gains and are approaching resistance levels. A potential pullback in the US dollar could be supportive of equities.

Zacks Investment Research
Image Source: TradingView

Seasonality

Historic seasonal trends have been remarkably accurate in 2023 and provide a useful roadmap for investors. The pre-presidential election roadmap suggests that equities tend to rally into late summer and hit a bottom in late October.

Spin: Given the accuracy of seasonality in recent months, there is little reason for investors to abandon it now. A rally into year-end could be in the cards.

Zacks Investment Research
Image Source: Ryan Detrick, Carson Research

SPY Weekly Trendline

In equity trading, trendline support refers to a specific price level or line on a chart where the instrument’s price tends to find buying interest and bounce upward. It is typically drawn as a diagonal line that touches at least three significant points on the chart. Longer time frames tend to have more significance for traders.

Spin: So far this week, the S&P 500 Index ETF (SPY) found support at its weekly trendline almost exactly and reversed strongly, signaling a bullish sign.

Zacks Investment Research
Image Source: TradingView

Semis

Semiconductor stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD) are crucial to the current bull market. The bullish case for equities revolves around the expectation that the AI revolution will drive higher earnings and allow high-tech stocks to grow into their high valuations.

Spin: The Direxion 3x PHLX Semiconductor Sector Index (SOXL) stood out recently, rising more than 7% and finding support at its 200-day moving average. Buying interest in semiconductors indicates a β€œrisk on” sentiment.

Bottom Line

After a period of relative calm, several charts suggest that equities may experience a significant upswing into year-end.

Top 5 ChatGPT Stocks Revealed

Discover Zacks Senior Stock Strategist Kevin Cook’s hand-picked stocks with sky-high growth potential in the Artificial Intelligence sector. By 2030, the AI industry is projected to have an economic impact of $15.7 trillion, equivalent to the scale of the internet and the iPhone.

Today, you can invest in the future by leveraging the power of automation and AI technology. One of the selected companies in this report states, β€œAutomation frees people from the mundane so they can accomplish the miraculous.”

Download Free ChatGPT Stock Report Now >>

Want the Latest Recommendations from Zacks Investment Research?

Download Free Report: 7 Best Stocks for the Next 30 Days

Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports

Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports

Read the Full Article on Zacks.com

Zacks Investment Research

Please note that the views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.