You Might Be Doing Too Much in This Market

Editor's note: The market is especially complicated today. But according to Vic Lederman, editorial director of our corporate affiliate Chaikin Analytics, keeping things simple can be profitable... And one systematic approach can help. In this piece, adapted from the free Chaikin PowerFeed daily e-letter, Vic explains how investors can avoid overthinking and identify the best opportunities...

You probably don't need me to tell you that a lot is going on right now...

We've got interest rates... inflation... trade tensions... and a tech mania. Heck, just about every pressure you could imagine is in play today.

Put simply, the market is facing many complicated problems. And we're seeing a lot of volatility as it sorts everything out.

That's OK. It's normal. But for some reason, times like these do something strange to investors.

I call it "complicated problems require complicated solutions" thinking. Or more simply, "doing too much."

I'm sure you've seen this...

I've heard countless people explain how they'll outsmart this market. Their thinking is 10 layers deep. And honestly, their investment ideas often sound like conspiracy theories.

Faced with an incredibly complicated world... they reach for complicated solutions. And in the process, they make bets that require absurd leaps of logic.

We can do better...

It's true – we live in a complicated world. But the reality of the market's price action is relatively simple.

This might sound silly to you. But at the end of the day, stocks are either going up... down... or sideways.

That's it. Those are the outcomes.

And today, with the help of the Power Gauge, it's easy to see which stocks are heading in the right direction.

At Chaikin Analytics, we use the Power Gauge to analyze the markets. This key tool – developed by our founder Marc Chaikin – gathers investment fundamentals and technicals into a simple rating of "bullish," "neutral," or "bearish."

Only four out of 11 top-level sectors in the Power Gauge currently hold a "bullish" or "very bullish" rating.

Digging deeper, nine out of 21 subsectors hold a "bullish" or "very bullish" rating.

It's that simple. It's also easy to see where the market's most dangerous spots are...

For example, one top-level sector has zero bullish stocks in it. I'm talking about the Materials Select Sector SPDR Fund (XLB)...

Right now, the Power Gauge rates it as "bearish." And over the past three months, materials has been one of the worst-performing market sectors.

It's easy to see why when you look at XLB's Power Bar rating. Fourteen of the rated stocks in the fund are in "bearish" territory...

Personally, I want to avoid sectors like this. Instead, I'll align myself with sectors that are soaring.

That might sound simplistic at first. But it works...

Take the five-year chart of the Energy Select Sector SPDR Fund (XLE) as an example...

It shows clearly that the energy sector had a strong run from February 2021 through February 2023.

The Power Gauge was right alongside it, too. And using Chaikin Analytics' proprietary measure of relative strength, we were able to see when the fund was outperforming the broad market... another bullish sign.

With the help of the Power Gauge, Marc was also able to see when the run was over. In early June 2023, he warned his readers, "Don't wait for energy to bounce back."

So, if you've fallen into the trap of "doing too much," there's still time to climb out...

Sure, we're in a complicated market. But the Power Gauge is still rating the best sectors and subsectors.

And we're still finding winners inside of those. You can, too.

Good investing,

Vic Lederman

Editor's note: In just two months, the volatility of 2025 has already taken many investors by surprise. But Marc sees an opportunity. Using his Power Gauge, he has identified a group of overlooked stocks that are poised to outperform the market. Plus, he is sharing a crucial update to his No. 1 investing strategy from more than 50 years on Wall Street... Get the full details here.