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Looking at the last month, seven out of eleven sectors are down more than 5%.
In this episode of Stocks in Translation from our new home above the NYSE trading floor on Wall Street. Our hosts, Yahoo Finance Markets and Data Editor Jared Blikre and Producer Sydnee Fried, explore market technicals with “master technician” Mark Newton, FundStrat’s Global Head of Technical Strategy.
Newton’s target for the S&P 500 is 6,650. While this may seem high—especially considering the market’s response after the holidays and its slumping start to 2025, Newton notes, “It’s really been thanks to technology that markets have been able to hold up and actually recover. We do still have a lot of momentum heading into this year, thankfully, given the ‘Magnificent Seven’ and technology.”
Newton emphasizes the importance of continuing to “favor large-cap growth and trade momentum” rather than immediately shifting focus to mean reversion — our word of the day.
Blikre introduces “mean reversion” which he defines as “a tendency for asset prices or other metrics to move back towards their historical average or mean over time.”
“There are specifically two sectors that are starting to show short-term mean reversion… one being energy… and the other being healthcare,”
Newton cautions, “It’s often difficult to put much stock in mean reversion having a lot of longevity. So you can get a bounce in any of these sectors, but normally, it tends to be short-lived.”
When asked whether passive investors should consider mean reversion, Newton advises paying close attention to “what’s happening under the hood.” He highlights the importance of “looking at equal-weight indices, equal sectors, how that rotation is starting,” adding that this analysis is “very important.”
Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service.
This post was written by John Tejada.
