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Stock prices once again hit new all-time highs for the S&P 500 (SPY). This has happened twice recently, both times with failure, and this third time doesn’t seem as appealing either. What’s stopping stocks from hitting new highs? And what should investors do to get better performance? Steve Reitmeister, a 43-year investment veteran, is currently He shares his thoughts, including previews of 11 of his favorite stocks. Read below for the answer.
In my recent commentary, I have speculated that a range market will arrive at the end of 2023 to absorb some of the surge. However, so far, the stock has been consolidating below the S&P 500 index’s all-time high of 4,796. (spy).
Consolidation is simply a narrower trading scope. While investors are refusing to sell significantly, they are also not ready for further gains. It feels like the car is accelerating at the starting line of a race.You hear a lot of noise, but it doesn’t go anywhere.
Read on to learn more about the reasons behind this consolidation and when the stock will be ready to compete.
Market commentary
The stock has twice attempted to reach all-time highs above 4,800 on the S&P 500 index, but has twice failed at that level, and the stock has since fallen.
Yes, Thursday’s behavior appears to indicate 3rd That kind of attempt. But it was a very hollow rally, with the usual questionable stocks in the S&P 500 doing well, and small-cap stocks and other riskier stocks lagging. That’s not a sign of a healthy bull. And the probability of setting new highs is very low.
Some say the problem is that economic indicators are too weak. Something like a horrifying -43 on the Empire State Manufacturing Index on Tuesday.
Others, however, say economic indicators are too strong, including Thursday’s better-than-expected retail sales. This pushed the 10-year Treasury yield further above 4% and reduced the likelihood of the first rate cut at the Fed meeting in March.
Sorry, you can’t have it both ways. And perhaps the answer is that neither of these propositions is true.
In other words, I don’t think investors are really worried about an impending recession. Nor are they afraid of another sharp rise in interest rates like in the fall of 2023.
Simply put, the market has come a long way since the October 2022 bear market bottom. Considering that the S&P 500’s long-term average annual return is only modest, a total gain of 37% from that trough to date is a large amount of profit in a short period of time. 8%.
Therefore, now is a good time for a long pause. It’s like taking a long break after running a marathon.
What you need is rest. And we will continue to build up our strength to reach even greater heights.
In the world of stock markets, trading ranges typically widen in conjunction with falling prices. As a result, investment terms such as the following will appear more frequently:
- Profit fixed
- sector rotation
- change of leader
- buy dip
- pause to refresh
- and so on…
But the most appropriate term at this point is integration. As I shared above, this is just a very narrow trading range just below the resistance point. Currently, that resistance corresponds to the closing high of 4,796…but for simplicity’s sake, it’s easier to think of it as 4,800.
Importantly, at this point, it’s healthy and normal for stocks to ease after such a long rally. After that, don’t be surprised if the consolidation turns into a wider trading range, with the 50-day moving average of JPY 4,628 potentially serving as a downside target.
Moving average: 50 days (yellow), 100 days (orange), 200 days (red)
A break below 4,600 is unlikely unless larger fundamental concerns arise. But let’s appreciate that the next two levels of price support are 4,488 on the 100-day moving average and around 4,400 on the 200-day moving average.
Your trading plan should remain bullish. Use the ensuing drop as an opportunity to buy the dip. The stocks that lead in 2023 are not. That strategy will be implemented.
Instead, valuations and quality will be more important this year, as the overall market P/E ratio is not cheap. GAARP is fine (growth at a reasonable price)…but it’s not growing at any price like it was last year.
If you want an idea of my favorite stocks for 2024, read on…
What’s next?
Check out my current portfolio of 11 stocks packed with great benefits from our unique POWR Ratings model.
Yes, the same POWR Ratings model has produced nearly four times better results than the S&P 500 going back to 1999.
Additionally, we’ve selected two special ETFs in sectors that could outperform the market in the coming weeks and months.
These top 13 trades are based on my 43 years of investing experience, having seen bull markets, bear markets, and everything in between.
If you want to learn more and see our handpicked 13 lucky deals, click the link below to get started today.
Steve Reitmeister’s trading plans and recommendations >
I wish you success in your investments.
Steve Reitmeister…but everyone calls me Leity (pronounced “righty”)
StockNews.com CEO, Reitmeister Total Return Editor
SPY stock was trading at $477.39 per share Friday morning, up $0.90, or 0.19%. Year-to-date, SPY is up 0.44%, compared to the benchmark S&P 500 index’s gain of % during the same period.
About the author: Steve Reitmeister
Steve is better known to StockNews readers as “Reity.” Not only is he the CEO of the company, Reitmeister also shares his 40 years of investment experience in his portfolio. Learn more about Reity’s career and find links to his latest articles and stock picks.
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