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Stocks Rise from Oversold Levels

Stocks Rise from Oversold Levels

January 31, 2022
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Key Takeaway

The S&P 500 held support above $4,250 after indicators reached extreme oversold levels, similar to what occurred in March 2020. Short-term buyers are responding to the recent discount in share prices, which means growth stocks are due for a bounce relative to value stocks. Over the past week, technology and biotech stocks declined to lower support levels, while energy approached overbought territory. 

Our tactical portfolios, which follow short-term momentum signals, are starting to rotate back into growth stocks. Further, historical data point to a recovery period for stocks over the next three months.

S&P 500 (SPY) Historical Average Returns, 20 years

Source: Cannon Advisors, StockCharts data