After over a month long storm, the global market has finally taken a breather. Heavy sell-offs triggered by the Chinese market slowdown, global growth issues and a steep plunge in oil prices now appear overdone. The factors – mainly oil and China – for which the market went into a tailspin, brought the recent relief (read: Alternative ETFs to Fight the Slump).
The Chinese central bank let the value of the yuan to rise sharply against the U.S. dollar on Monday, when the biggest one-day jump in the currency was seen in almost a decade. The move finally prevented long-standing high-level talks about a meaningful deceleration in yuan.
On the other hand, developments were positive in the oil patch with prices soaring as the market mulled over the possibilities of a deal to limit supplies later in the year. Also, stimulus hopes in Japan and Europe to boost waning economies charged up the market (read: Japan ETFs to Tap on Renewed Stimulus Hopes).
Back home, retail sales for January came in at the stronger side. Retail sales gained 0.2% in January – higher than the consensus estimate of a 0.1% increase. All these developments have brought back the risk-on trade sentiments – which were long missing – in the market. Among the top U.S. ETFs, investors saw SPY add 1.7%, DIA advance 1.4% and QQQ move higher by about 2.3% on February 16.
Not only the U.S. market, all world ETF iShares MSCI ACWI (ACWI) was up 2%, iShares Asia 50 (AIA) jumped 2.8%, China ETF iShares China Large-Cap (FXI) advanced 4.2%, Vanguard FTSE Europe ETF (VGK) moved higher by 1.7% and iShares MSCI Japan (EWJ) climbed 3.7%.
While we do not believe these bounces have legs, investors’ sentiments about risky investments became relatively relaxed lately especially because of compelling valuation.
Thus, momentum investing might be an intriguing idea for those seeking higher returns in a short spell. Momentum investing looks to reflect profits from buying stocks which are sizzling on the market. Below we highlight three momentum stocks and ETFs which may find a place in investors’ wish list (read: Beat the Market with Momentum ETFs).
Stock Picks
For stocks, we have chosen top picks using the Zacks Screener that fits our criteria of a momentum score of ‘A’, stock Zacks Rank #1 (Strong Buy) and positive estimate revisions for the current quarter. Here are the three recommended stocks.
Delta Apparel Inc. (DLA)
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