Investor confidence in inventory market (SPY) path could be very low. That’s due to the large divergence in market outlooks from main market prognosticators. Some make an ideal case for a brand new bull market rising. Others make an equally logical pitch for the bear market to return with new lows on the best way. That’s the reason 40 12 months funding professional Steve Reitmeister shares his view in his model new market commentary beneath.
The inventory market (SPY) has been up, down and throughout since final week’s commentary. That is as a result of bulls and bears are slugging it out for dominance throughout this “Dazed & Confused” part for the market.
What does that imply?
What occurs subsequent?
What ought to an investor do about it?
We’ll discover the solutions for every of those urgent questions on this week’s Reitmeister Complete Return commentary.
Market Commentary
Now let’s a step again to final week’s commentary the place I outlined 4 potential outcomes for the market after the crucial Fed charge announcement on Wednesday 2/1. Certainly, we landed on the least of engaging of which. That being…
“State of affairs 4: Dazed & Confused
That is the place the Fed provides blended indicators. Nonetheless hawkish for a very long time to save lots of face given earlier statements. And but do tip their hat a bit of to moderating inflation.
This grey space results in a buying and selling vary till traders have extra details in hand. I think that 4,000 is the low finish with 4,200 on the excessive finish. This comes hand in hand with a ton of volatility as every new headline has traders recalibrate the bull/bear odds.”
The market since then has lived as much as ever single syllable of the above expectations. Particularly the half in regards to the volatility that comes after each key headline.
Raging increased after the speech
Tumbling down Friday & Monday after unemployment report got here in WAY TOO HOT pointing to the necessity for the Fed to remain vigilant in opposition to inflation an excellent whereas longer.
After which raging increased once more at this time after Chairman Powell’s interview at The Financial Membership of Washington D.C.
Watch it right here for those who like, however to me he simply reiterates the purpose that inflation is just too sizzling and the aforementioned employment report solely confirmed that notion. This prompts him to maintain charges elevated for for much longer than most traders recognize.
Heck, he even acknowledged that this shocking power might make them be much more hawkish than beforehand acknowledged. Maybe which means increased than 5% charges. And maybe it means they are going to be at it longer than the top of the 12 months. Maybe each.
These concepts are very hawkish, rising the percentages of recession, making the Tuesday rally borderline insane. However then once more, such was the oddity of the response final Wednesday when he stated nearly similar issues.
Trying forward the principle headline catalysts for shares would be the following:
2/14 Shopper Value Index
2/15 Retail Gross sales
2/16 Produce Value Index
Which means there’s a little bit of calm earlier than the subsequent headline storm and thus anticipate shares to maintain banging round within the 4,000 to 4,200 vary for the S&P 500 (SPY) til then.
What’s so particular about 4,200?
The official definition of a brand new bull market is whenever you rise 20% from the lows. On this case the lows from October had been 3,491 x 20% = 4,189…which mainly equates to 4,200.
Be aware how we flirted with that degree a couple of occasions this previous week solely to seek out an excessive amount of resistance.
Right here is our recreation plan from right here…
Proper now, I see a 65% likelihood that we devolve again into bear market making new lows within the months forward. However 35% likelihood of a gentle touchdown that makes method for the subsequent bull market.
This explains why the Reitmeister Complete Return portfolio is at the moment 36% lengthy the inventory market with a mix of Threat On and Threat Off positions.
If and when the bear market comes again with a vengeance, as possible signified by a break again beneath the 200 day transferring common (3,947), then we are going to get again into our bearish hedge that so efficiently gained almost 7% from August 2022 by means of 12 months finish as the general inventory market slumped.
However, if as a substitute we break above 4,200 in a significant method, then the percentages of bull market could have elevated…and we are going to wish to come alongside for the journey by transferring as much as 50-60% lengthy the inventory market. The brand new additions must be of the Threat On selection (growthy corporations at discounted costs with spectacular POWR Scores).
I’ll finish by sharing this analogy.
The funding journey is usually like going round a Grand Prix race monitor. Numerous twist and turns that make us grow to be cautious and decelerate. However proper after the turns comes the straightaway the place we are able to put the pedal to the steel with better confidence.
Certainly this can be a heck of a good flip proper now as we might break north with bull market or get again on the rougher bearish detour. So maintain onto the steering wheel tight proper now as there’s possible a straightaway on the best way that can make our lives simpler…and our wallets fatter.
What To Do Subsequent?
Watch my model new presentation: “Inventory Buying and selling Plan for 2023” masking:
- Why 2023 is a “Jekyll & Hyde” 12 months for shares
- How the Bear Market May Come Again with a Vengeance
- 9 Trades to Revenue Now
- 2 Trades with 100%+ Upside Potential as New Bull Emerges
- And A lot Extra!
Watch “Inventory Buying and selling Plan for 2023” Now >
Wishing you a world of funding success!
Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Complete Return
SPY shares . 12 months-to-date, SPY has gained 8.57%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.
In regards to the Creator: Steve Reitmeister
Steve is healthier identified to the StockNews viewers as “Reity”. Not solely is he the CEO of the agency, however he additionally shares his 40 years of funding expertise within the Reitmeister Complete Return portfolio. Be taught extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.
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I agree with your point of view, your article has given me a lot of help and benefited me a lot. Thanks. Hope you continue to write such excellent articles.