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Market & Portfolio Review: 2-4-22

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Recipe for a Violent Rally

In this week’s stock market update, we will review the bottoming process that we believe is underway across U.S. stocks. Much to the chagrin of most investors, stocks don’t bottom and go directly up; they bottom through a process of testing previous lows and slowly working off willing sellers at higher prices. As those sellers are exhausted inventory, the stock recovery gains steam. After a successful retest of higher lows this week, our research suggests we are one step closer to escape velocity to much higher levels.

Key Takeaways

  1. Retail investors raised cash at the fastest pace since before the pandemic –> contrarian buy signal
  2. S&P 500 daily RSI fell to 26, the lowest reading since March 2020 –> oversold = buy signal
  3. Retail sentiment (AAII) fell to the worst reading since 2013 –> contrarian buy signal

The information here is presented by licensed professionals and not specific to any individual’s personal circumstances. Investment advisory services offered through LifePro Asset Management, LLC, a registered investment adviser. Investments involve risk and are not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal any historical performance. Discussion of any specific stocks are based on objective, non-performance criteria and such discussion neither serves as a recommendation nor as the receipt of, or a substitute for, personalized advice. Due to various factors, including changing market conditions, such discussion of positions and/or recommendations may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Advisor, or from any other investment professional. Forward-looking statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” are based on management’s views and assumptions at the time such statements were originally made and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. LifePro Asset Management does not undertake any obligation to correct or update any forward-looking statements on the LPAM Site.

Robert Reaburn

Robert Reaburn

Robert Reaburn is the Executive Vice President and Head of Wealth Management at LifePro Asset Management. He works with financial advisors building diverse financial portfolios that best empower their clients with a lifetime of financial security.

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