Leveraged ETFs To Bet On Market Rebound For Big Gains
Zacks Investment Research | Feb 14, 2018 10:50PM ET
After a vicious selloff last week, the Wall Street is back in the green for the year, bouncing back strongly from their lowest level, which had sent the major indices to a correction territory. Major indices climbed for the fourth consecutive session with the Dow Jones Industrial Average adding more than 1,000 points and the S&P 500 index surging 4.6% — the strongest four-session performance since mid-2016.
Meanwhile, the CBOE Volatility index, also known as fear gauge, slipped below 20 after jumping to above 50 last week.
Inside The Rebound
There are several reasons for a renewed rally in the market. First, the long-term fundamentals remain bullish for stocks given solid corporate earnings and accelerating global economic growth. The euphoria surrounding the tax reform has been the biggest catalyst this year, as it will perk up the economy and save billions for corporations, leading to reflation trade and an earnings boost. Given this, the tumultuous ride in stocks last week has provided investors an opportunity to buy on the dip.
Secondly, fear of inflation seems to be abating though the core Consumer Price Index increased more than expected in January. This is because a year-over-year increase of 1.8% in inflation is on par with the same period a year ago. This means that inflation is rising but under control. Additionally, downbeat data for retail sales calmed inflation fears. U.S. retail sales dipped 0.3% in January — the lowest level in 11 months, signaling that the economy may not be expanding too quickly (read: Zacks Investment Research
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