Carson Group continues to think that stocks "are trying to carve out a potential low" while risks clearly remain high over the trade war, the firm's chief market strategist, Ryan Detrick, wrote in commentary posted Tuesday.
He added that the Federal Reserve sits in a tough spot as its chair, Jerome Powell, draws pressure and criticism from President Donald Trump.
At the same time, Detrick cited several positive points amid the recent market turmoil.
Among the positives, he said:
- Market breadth has held up well in the "near bear market," with data suggesting strength in the S&P 500 below the surface. The index also found support just beneath the 5,000 level, which was the last low in April 2024.
- Credit markets have held on despite market volatility and worry over the economy, a situation that could change quickly. Although the S&P 500 is down about 12% for the year, high-yield corporate bonds are down less than 2%, "much better than I’d expect if the monster under the bed was real."
- While consumer and investment manager sentiment has hit extreme lows, this could prove a positive from a contrarian viewpoint. "Remember, once everyone is bearish the sellers may very well have exhausted themselves and a major low can form," he wrote. Those looking to buy on expectations would "want to buy when things were on sale and my friends, we are seeing that right now."
"The fears and worries are real, but there are some positives out there as well. Stick with your plan and when in doubt, diversify it out. One of the worst things you could do right now is move everything out of equities and into cash or something super hot like gold," Detrick wrote. "Rebalancing, staying diversified and following your investment plan are important investment concepts to focus on in times like this."
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