Certainly that is what everybody desires to know…are we nonetheless in a bull market or have we returned to bear market situations? And even crazier…what if the bull market was only a mirage attributable to 7 mega cap tech shares artificially inflating the S&P 500 (SPY)? 43 yr funding veteran Steve Reitmeister shares his newest insights available on the market together with a preview of his high 10 picks for the times forward. Learn on beneath for extra….
The +4.9% studying for Q3 GDP Thursday morning was a little bit of a shock…however does present that the GDPNow mannequin from the Atlanta Fed was amazingly on the right track.
Oddly this would appear to indicate that the US financial system could also be overheating which might apply some further inflation strain. Amazingly, the other is true.
The Fed’s favourite measure of inflation, Core PCE, really got here down from 3.7% to 2.4%…fairly darn near their 2% goal stage.
That is nice information, proper?…so why did the S&P 500 (SPY) proceed to tank on this information falling ever additional beneath the 200 day shifting common?
Transferring Averages: 50 Day (yellow), 100 Day (orange), 200 Day (crimson)
As a result of bond charges stay elevated. Some traders are afraid about what which means for the softening of the longer term financial system sooner or later as I mentioned on this current commentary about price normalization.
Warning> Traders Put together for “Sea Change”
The above will not be essentially an indication of bearish issues to return…however it does communicate to how charges getting again to regular ranges after a loooooonnnngggg interval of extremely low charges would seemingly equate to slower development and shares not being uber-bullish.
Above is the nice model of the story. The way more ominous model of the story was shared in my commentary from earlier this week in regards to the idea of “Debt Supercycle”. You possibly can learn that within the article beneath:
Bear Market Warning from the Bond Market?
So now we ask ourselves…are we in a bull market or bear market now???
The definition of a bull market is when the S&P 500 rises 20% above its low. Nicely, the October low of three,491 x 20% = 4.189. We have been effectively above that for majority of the yr…but are a notch beneath that now. The purpose being from this classical standpoint we’re in a bull market.
Sadly everyone knows that the S&P 500 is not a great inventory index as a result of it’s overly influenced by the 7 mega cap tech shares that maintain far an excessive amount of sway. That’s the reason folks usually like to take a look at broader measures of the market such because the Equal Weighted model of the S&P 500 (RSP).
There we understand the underside was 124.92 and the 52 week excessive was 24.7% above at 155.77. That additionally passes the bull market check…however is faltering quick as we’re at the moment 13.19% beneath that late July peak.
Now let’s think about the Russell 2000 full of small caps that truly peaked in November 2021 at 2,421 and is now 31.56% beneath at 1,657. That the majority actually doesn’t sound bullish.
The grand level is that proper now the bull/bear debate is in flux as excessive bond charges have, which will preserve going increased, is asking the longer term well being of the financial system into query. This places the inventory market in limbo.
Not fairly bullish…not fairly bearish…however altogether unsure. Sadly, when the market is unsure it has a downward bias which is clearly on show of late.
This has compelled me to get extra cautious in my strategy within the Reitmeister Complete Return service that has now been lowered to only 50% lengthy the inventory market after current trades to promote some shares…plus including 2 inverse ETFs into the portfolio to rise in worth if the general market continues to say no.
If issues preserve getting extra bearish in outlook, particularly if the chances of future recession are on the rise, then I’ll carry on this defensive course to take away all shares within the portfolio and simply go web brief with inverse ETFs.
The sign to get lengthy once more will likely be sounded by the 200 day shifting common which has confirmed to be the perfect timing indicator through the years for the long run trajectory of the inventory market.
Conversely, if the rise in charges ends, then seemingly shares will bounce again to life. So a break again above the 200 day shifting common could be the perfect sign to count on an prolonged bull run. That ought to compel everybody to maneuver again in direction of a 100% invested portfolio targeted on Threat On positions.
All in all, we’re at a tipping level. So, what occurs subsequent will seemingly have long run penalties. Gladly we all know what to do as soon as Mr. Market reveals his hand.
What To Do Subsequent?
Uncover my present portfolio of 5 shares packed to the brim with the outperforming advantages present in our POWR Rankings mannequin.
Plus I’ve added 5 ETFs which are all in sectors effectively positioned to outpace the market within the weeks and months forward. (And sure have some inverse ETFs within the combine which are rising because the market falls).
That is all primarily based on my 43 years of investing expertise seeing bull markets…bear markets…and all the pieces between.
In case you are curious to be taught extra, and wish to see these 10 hand chosen trades, and all of the market commentary and trades to return….then please click on the hyperlink beneath to get began now.
Steve Reitmeister’s Buying and selling Plan & Prime Picks >
Wishing you a world of funding success!
Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Complete
SPY shares have been buying and selling at $413.60 per share on Friday morning, up $1.05 (+0.25%). 12 months-to-date, SPY has gained 9.35%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.
Concerning the Writer: 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. Study extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.
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