The Week Ahead in Stocks – Mar 26

Equity markets are off to an impressive start this week, with Nasdaq futures up 1.5%. Friday’s panic selling has given way to Monday relief buying with barely a catalyst. The market can be a fickle thing.

The possible change in sentiment is not driven by good news, rather the absence of bad news and the fact we have a whole week’s trading ahead. No-one wanted to risk holding over the weekend and wake up to a Black Monday. Instead they are waking up trying to chase a gap.

Friday’s session was not quite a 90% down day in terms of declining stocks, but the declining volume was heavy, and on the back of Thursday’s rout, we could say the market was very oversold.

Remember crashes happen when the market is oversold, not overbought, so seeing these readings does not make it an automatic buy. Yet a snap back rally is the most likely outcome.

But are individual stocks setting major lows? Well we can only deal in probabilities and I’ve talked about how the market rarely tops with a close at the highs. The opposite is also true although there have been instances. When a market closes at the dead lows, a lower low has often but not always been made. Does this look like a low?

In our stock updates today and throughout the week, we aim to identify which stocks provide the greatest opportunity.. and with the least risk in one of the most exciting markets in a long time.

Good luck and good trading this week.

Andrew McElroy
Chief Stocks Analyst