U.S. markets have likely hit a bottom – analyst

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The market has likely hit a near-term bottom following a “textbook classic” V-shaped recovery from recent geopolitical turmoil, according to Matt Powers, managing partner at Powers Advisory Group.

The Nasdaq’s (COMP:IND [https://seekingalpha.com/symbol/COMP:IND]) 12-day winning streak—its longest since 2009—and the S&P 500’s (SP500 [https://seekingalpha.com/symbol/SP500]) return to highs in just 15 trading days demonstrate remarkable resilience.

“It tells you the underlying trend is still pretty strong and how resilient this market really is,” Powers told CNBC.

However, Powers cautioned that the market remains highly sensitive to external factors despite the swift recovery. Oil prices (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]), (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]), Federal Reserve timing, and potential geopolitical escalations could quickly shift sentiment, even though much of the macro risk appears to be priced in.

“This is still very much a headline-driven market. I don’t think we’re out of the woods yet,” he said.

The rally’s narrow leadership remains a concern for market health. Powers noted that approximately 40% of the gains off the lows have been driven by just five mega-cap names: NVIDIA (NVDA [https://seekingalpha.com/symbol/NVDA]), Microsoft (MSFT [https://seekingalpha.com/symbol/MSFT]), Apple (AAPL [https://seekingalpha.com/symbol/AAPL]), Alphabet (GOOG [https://seekingalpha.com/symbol/GOOG]), (GOOGL [https://seekingalpha.com/symbol/GOOGL]), and Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]).

With the equal-weight S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) lagging the cap-weighted index, most stocks are not participating in the upward trend, which Powers described as “not the most healthy setup if you’re talking about a durable move higher in the market.”

For the rally to prove sustainable, Powers emphasized that market participation must broaden beyond mega-cap technology stocks.

“Regardless of cap size, I think just again for this rally to work from here, it has to broaden,” he explained, adding that strong earnings reports will be essential to provide a solid foundation for continued growth.

Despite recent volatility, Powers reported that investor sentiment remains surprisingly calm based on his daily client meetings.

“There’s no panic in the system right now… Investors are staying invested,” he observed. This resilience suggests that market participants are maintaining a long-term perspective rather than rushing to cash positions.

Powers advised investors against reacting impulsively to every news headline, particularly during geopolitical pullbacks.

“The biggest mistake, I think, in the markets is trying to time every headline,” he warned, noting that the market’s best days often come immediately after its worst ones, and missing just a handful of those recovery days can cause significant long-term portfolio damage.

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