Market Outlook: Positive Indicators Amidst Volatility
Chicago, IL – March 20, 2025 – Today, Zacks Investment Ideas highlight notable stocks: Tesla (TSLA), Apple (AAPL), Nvidia (NVDA), Meta Platforms (META), and Amazon (AMZN).
Market Correction: Bears Reassert Control
Following a brief rally on Friday and Monday, the stock market experienced a downward trend on Tuesday as bears regained control. The wide ranges in U.S. equities may widen even further as the Federal Reserve is set to announce its interest rate decision on Wednesday afternoon. In an unusual turn, tariff news has been minimal; however, the Trump administration is poised to impose new tariffs in early April.
On the geopolitical front, President Donald Trump engaged in a lengthy discussion, lasting over 90 minutes, with Russian President Vladimir Putin, aiming to negotiate a peace deal regarding Ukraine. Details from this call remain unclear as of this writing.
A Chance for Bulls: Three Favorable Indicators
Despite the challenging trading environment, bulls could have three significant factors working in their favor. One strong indicator is breadth in market participation.
Back-to-Back 90% Advancing Days
Two consecutive days where 90% of S&P 500 stocks advanced were recorded on Friday and Monday. Such occurrences can signify a potential market bottom. Analyst Jason Goepfert evaluated the data, confirming that when 90% advancing days follow a six-month low, the S&P 500 has been higher in every instance two months later, resulting in 17 instances. Additionally, the market has improved in ten of the last twelve occurrences based on both six-month and twelve-month time frames.
Historical Trends Indicate Positive Spring
The election season has historically predicted a weak first quarter for stocks. However, similar trends imply that markets often find a bottom in late March and typically rally into the summer period.
Diminished Bullish Sentiment
The AAII Bull/Bear sentiment survey shows that bullish sentiment has dropped to its lowest level (17.7%) since September 2022. Remarkably, for the first time in history, bullish sentiment has remained below 20% for three consecutive weeks.
A key focus moving forward is the performance of the “Magnificent 7” stocks, which have recently been labeled the “Lag7” due to their underperformance. Despite this classification, these leading tech companies still constitute a significant part of the market. Tesla, notably affected, is seeing some recovery following an analyst upgrade and a survey indicating that around 70% of respondents would consider purchasing a Tesla in Germany.
Additionally, Meta Platforms and Amazon are testing their rising 200-day moving averages, a potential support level. Conversely, Apple and Nvidia are currently trading below this average. However, NVDA has seen gains in early trading after CEO Jensen Huang’s presentation at the GTC global artificial intelligence conference.
Conclusion: Monitoring the Market Landscape
Despite current geopolitical uncertainties, the combination of strong market breadth metrics, historically favorable seasonal trends, and notably low bullish sentiment presents a persuasive case for potential market recovery and gains in the future.
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Zacks Names Top Semiconductor Stock
This semiconductor is just 1/9,000th the size of NVIDIA, which has surged by more than +800% since our initial recommendation. While NVIDIA remains strong, our new top chip stock has substantial growth potential.
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Amazon.com, Inc. (AMZN): Free Stock Analysis report
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Meta Platforms, Inc. (META): Free Stock Analysis report
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