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Good Stocks Bounce Like Fresh Tennis Balls

By Louis Navellier. Originally published at ValueWalk.

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In his Daily Market Notes report to investors, while commenting on good stocks boucing, Louis Navellier wrote:

Mechanical Breakdown

The 3.2% selloff in the S&P 500 on Monday was overdone and now the stock market is grossly oversold. There were some mechanical problems with the way ETFs traded yesterday.


Q1 2022 hedge fund letters, conferences and more

ETF has its own spread on top of the spreads on stocks, and yesterday, some of those ETF spreads hit 4-6% which means you would get 4-6% less than the underlying value of the stocks. That’s a mechanical market breakdown and the main reason for the market freaking out late on Monday.

Fortunately, Bespoke Investment Group pointed out that when the S&P 500 falls over 3% in a day, the next day it bounces 1.86% and then continues to meander higher by 0.11%, 0.18%, 0.46% and 0.52% in subsequent days.  So the good news is we are on the road to recovery.

Good Stocks Bounce

The energy stocks, fertilizer stocks, food stocks, shipping stocks, and semiconductor stocks all are up big today. The good stocks bounce like fresh tennis balls.

The Consumer Price Index (CPI) report on Wednesday may be a catalyst to boost the overall stock market since evidence is expected to emerge that inflation has peaked.  My favorite economist, Ed Yardeni, pointed out that the inflation associated with wages, durable goods, used cars and possibly even rents have peaked near-term.  That is the good news.  The bad news is that the inflation associated with food and energy persists.  However, food and energy are excluded in the core inflation calculations, so the core rate of inflation is definitely expected to decline.

Currently, the Atlanta Fed is estimating 1.8% annual second-quarter GDP growth, down from its previous estimate of 2.2% annual GDP growth.  The Atlanta Fed is currently at the low end of private economists’ GDP estimates for the second quarter ranging from 1.6% to 4% annual GDP growth.

Trouble in China

The Financial Times reported that Chinese export growth slowed to a 3.9% annual pace in April, which is the slowest pace in two years after growing at almost a 15% annual pace in March.  Clearly, the global economic slowdown, plus China’s Covid lockdowns are now taking a toll. 

A newly released video of the workers storming the barriers and fighting with security staff at an Apple Inc (NASDAQ:AAPL) contractor, Quanta, which makes MacBook Pros and other Apple devices, reveals how unpopular the Covid-19 sanctions are in the Shanghai province.  This Quanta video showed security guards, clad in protective white gowns, trying to catch workers that jumped over barriers.  Not surprisingly, the Quanta factory is only operating at 30% capacity due to the recent Covid-19 sanctions and lockdown orders.  Clearly, China’s exports will likely resume rising once the Covid-19 sanctions and lockdown orders are lifted.

Coffee Beans

An oblivious winner from Michigan finds a forgotten $242,256 lottery ticket in his wallet. The man checked his tickets using the Michigan Lottery app and was shocked to see his ticket had won the jackpot. The winner said he plans to use his jackpot to start college funds for his grandchildren and bolster his retirement savings. Source: UPI. See the full story here.

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