Editor's note: To succeed in this market, you must wait for the right time to strike... Many investors are unsure about what to do with their money right now as uncertainty surrounding inflation and ongoing geopolitical conflict have led to heightened volatility. And we're still in the early stages of this volatile market. But that means we still have time to position ourselves to capitalize on this setup when the time comes... That's why Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – believes it's crucial for folks to realize that the turbulence we've experienced recently will actually help us profit in the long term, and the time to strike is almost here... In today's Masters Series, adapted from the April 10 and April 18 issues of the Chaikin PowerFeed e-letter, Marc explains why there has been a recent uptick in volatility... details how this turbulence is a good sign for investors who are paying attention... and shares how you can take advantage of this rare setup...
Volatility Is Back... Here's What It Means for the Market By Marc Chaikin, founder, Chaikin Analytics Stocks just went on an incredible five-month run... The S&P 500 Index surged roughly 25% from the end of October through the end of March. That's the best five-month performance for the benchmark index since 2020. Perhaps more impressively, the S&P 500 didn't suffer a single 2% pullback in that span. A few catalysts led to this strong, steady rally... First, the U.S. economy is in great shape. The latest data from the government showed a 1.6% annual growth rate in gross domestic product ("GDP"). Meanwhile, the unemployment rate has remained under 4% for 27 straight months – marking the longest streak since the 1960s. And wages are up roughly 4% over the past 12 months. American consumers keep spending, too. Retail spending jumped 0.7% in March from the prior month, coming in well above expectations. Right now, the economy is strong. And consumer spending can (and will) continue to fuel the economy. The University of Michigan's latest Surveys of Consumers report supports that idea. In early March, the surveys' creators said succinctly... The latest reading confirmed the remarkable improvement in consumers' economic views that began in December 2023. U.S. GDP grew 3.2% in the fourth quarter of 2023. Corporate earnings are expected to rise as well in 2024. Investment bank Goldman Sachs projects that S&P 500 companies' earnings will climb 8% this year – with profit margins rising as well. That brings us to a key point... With such a strong economy, we might not need interest-rate cuts to sustain the bull market. Until recently, we could've added "expected Federal Reserve rate cuts" to that list. However, all this strong economic data has crushed investors' hopes for a rate cut in June. That's fine by me, though. A strong economy is never bad for investors. But you've probably noticed a side effect of these dampened rate-cut expectations... In short, volatility is back. Stocks fell more than 5% over the first three weeks of April before regaining ground last week. That's the biggest pullback since October. The Chicago Board Options Exchange's Volatility Index ("VIX") is known as the market's "fear gauge." It's simply a measure of investors' expectations for volatility going forward. If it's rising, it means investors are getting more worried. And if it's falling, it means investors don't have many fears. Today, the VIX helps us see the rising turbulence in the market. It recently broke out to a five-month high. Take a look... 
Following such a long stretch of calmness in the market, a period of volatility makes sense. After all, we all know that stocks don't go up in a straight line forever. Today, the market is more cautious than it has been in months. But my point is simple... That's a good thing. It's a sign of a healthy market. In the short term, we can expect more volatility. The market could experience further declines over the next few weeks as nervous investors sell some of their positions. And as I've said repeatedly, I'm hoping to see a pullback soon. Remember, as I wrote in the Chaikin PowerFeed in March... The final seven months of presidential-election years (from June 1 to December 31) are often the best-returning months. In 16 of the past 18 presidential-election years, the S&P 500 was up over that span. And in all those instances, the index averaged a 10% gain. That period is fast approaching. But we're not there yet. So a continued pullback in the coming days wouldn't necessarily be a bad thing. In the end, we still may see one or two rate cuts later this year. That will fuel a post-election rally into the end of the year. It's important to remember, though... Rising earnings and expectations drive stock prices higher – not interest-rate cuts. My outlook remains "bullish" over the longer term. But I would see any pullbacks of 3% to 5% over the next couple months as buying opportunities. A sell-off could create excellent entry points ahead of the next big rally to end the year. Good investing, Marc Chaikin
Editor's note: Marc predicted the COVID-19 crash, the 2022 market crash, and this year's bull rally. And he just stepped forward to share an urgent warning about a huge shift that will hit the markets on May 15 – one that could help you double your money if you're prepared ahead of time... Marc recently held an online presentation to reveal how you can take advantage of this historic turning point – thanks to a strategy that has nothing to do with stocks, cryptocurrencies, or AI. Learn more here... | 
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