Stocks have certainly bounced strongly off their recent lows. NASDAQ 100 (QQQ) is now up just over 12% from the October lows. S&P 500 (SPY) added on almost 15% in the same time frame. The Dow Jones Industrials (DIA) has been the star performer, gaining nearly 18% in the past two months.
Lower interest rates and not so terrible earnings have certainly provided some fuel for the recent red-hot rally. Now that earnings season is winding down and rates are finding a floor, look for stocks to have trouble gaining ground from here. This is especially true for the Dow 30 stocks which have gotten too far ahead of themselves on a comparative and actual basis. Plus, the Dow is about to enter a seasonally bearish period as 2023 starts. Traders and investors looking to short stocks may be wise to consider doing it with DIA for these three reasons just mentioned.
