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The Zacks Analyst Blog Highlights: SPDR S&P 500 ETF, iShares Core S&P 500 ETF, Vanguard 500 ETF, Ultra S&P500 ETF and Direxion Daily S&P 500 Bull 3x Shares ETF

Zacks Equity Research

For Immediate Release

Chicago, IL – October 28, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include SPDR S&P 500 ETF (NYSEARCA: SPY –Free Report),iShares Core S&P 500 ETF (NYSEARCA: IVV –Free Report),Vanguard 500 ETF (NYSEARCA: VOO –Free Report),Ultra S&P500 ETF (NYSEARCA: SSO –Free Report) and Direxion Daily S&P 500 Bull 3x Shares ETF (NYSEARCA: SPXL – Free Report).

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Here are highlights from Thursday’s Analyst Blog:

Tired of Caution? Here’s a Bullish Case for S&P 500 ETF Investing

In the last few months, all that we heard was warnings about the impending crash in the S&P 500 index. Be it Goldman Sachs, HSBC, billionaire investor George Soros or Deutsche Bank's David Bianco – many have raised the yellow flag in front of S&P 500 investing time to time (read: Believe in George Soros? Short S&P 500 with These ETFs ).

Everyone had their share of reasons. After all, stocks saw an astounding start to Q3 despite Brexit, still-soft corporate earnings, weaker business investments in the U.S. and global growth issues. Especially, Goldman Sachs has long been vocal on this issue.

Most recently, the research house indicated that investor enthusiasm has now peaked and “points to a 2 percent near-term S&P 500 fall." The sentiment indicator, which looks to track the S&P 500 futures positioning, now stands at its maximum level of 100 and thus is due for a reversal (read: ETF Strategies for Q4).

Goldman also believes that corporate buybacks — one of the main factors in pushing up the stocks – will slow down in the second half of 2016, causing an upheaval in the market and expects the S&P 500 to slip by about 2% by December. On the other hand, HSBC technician sees “the possibility of a severe fall in the stock market is now very high.” They have all repeatedly cautioned about overvaluation in the market (read: Play These Inverse ETFs if You Hate This Bull Market ).

Against such a scenario, one strategist Tom Lee reasons out why the S&P 500 may close out the year with a double-digit return. His target for the S&P 500 is 2,325, up 8.7% from the close on October 26, 2016.

Bullish Arguments for S&P 500 Further Rally

According to the strategist, “the stock market and the high-yield market almost always move in sync," and "the high-yield market is up 18 percent this year.” He also went on to explain that "the S&P, any time the high-yield market has been up 10 percent, has averaged a 22 percent gain.” Since the index is now up about 4.7%, it has further room to run going by history.

On the earnings front, Lee indicated that “it's been actually one of the better earnings seasons.” On this front, we would like to note that Q3 earnings season is on its way to deliver positive earnings growth for the first time in six quarters.

As per the Earnings Trends report issued on October 26, 2016, earnings growth of the S&P 500 in Q3 is expected to be 1.4% on 1.4% higher revenues. Earnings growth momentum would pick up with 4.9% growth expected in Q4, 11.2% in Q1 of 2017 and 10% in Q2 of 2017. Revenue growth for Q4 of 2016, Q1 of 2017 and Q2 of 2017 are expected at 4.6%, 7.1% and 6.1%, respectively.

If this is not enough, expected strong sales in the upcoming holidays and the Halloween Effect may also contribute to the rally. The Halloween Effect means buying stocks six trading days before Halloween and selling on May 1. Historically, this period has brought bountiful returns for the stock market.

So, if you want to go against the tide and cash in on the above-said arguments, you can play the below-mentioned ETFs.

There are several regular S&P 500 ETFs including SPDR S&P 500 ETF (NYSEARCA: SPY – Free Report),iShares Core S&P 500 ETF (NYSEARCA: IVV –Free Report) andVanguard 500 ETF (NYSEARCA: VOO – Free Report). There are leveraged ETFs too. These are Ultra S&P500 ETF (NYSEARCA: SSO –Free Report) andDirexion Daily S&P 500 Bull 3x Shares ETF (NYSEARCA: SPXL – Free Report) (read: Will New SEC Rules Hurt Triple Leveraged ETFs? ).

SSO gives twice the daily performance of the S&P 500 while UPRO and SPXL deliver triple the daily performance of the S&P 500 (see all leveraged ETFs here).

Bottom Line

As a caveat, investors should note that leveraged products are risky in nature and suitable only for short-term traders. Plus, election uncertainty is looming large in this fourth quarter, which may foil the usual wining trend (read: 5 ETFs to Buy as Election Uncertainty Looms ).

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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