[ad_1]
The S&P 500 (SPY) has been falling since November 1, when the Fed began to take a dovish stance that opened the door to future rate cuts. Unfortunately, they never materialized and the start date continues to be pushed back further and further. This has led many to wonder if stock prices are preemptively preparing for a decline. So it’s a good time to hear investment veteran Steve Reitmeister talk about his outlook for the market, his trading plans, and his top picks to stay ahead of the pack. Read below for more information.
As you may remember from English Lit class, sometimes…Beware of the Ides of March”.
It was March 15, the day Julius Cesar was assassinated, and this early new year is often seen as an important checkpoint for investors.
Overall, most signs remain bullish, so there’s not much to watch out for. Meanwhile, the S&P 500 (SPY) has been up significantly over the past few months, and the overall market looks ripe for at least a small pullback, if not a correction.
That concept and more will be at the forefront of today’s market commentary.
Market commentary
Last week we reflected. What will cause a bear market now?
To summarize, there are two possible causes of a bear market. The first is a drastic devaluation of stock prices due to declining profits and risk-taking due to the looming recession.
The second precursor to a bear market is the formation of a stock bubble that becomes unsustainable. The last time this happened was back in 2000 when the tech bubble burst. But even the most ardent value investor would be hard-pressed to find such parallels with the current situation (there are probably some nosebleed-worthy AI stocks that deserve a haircut).
Putting these thoughts together, there isn’t much reason to fear the impending formation of a bear market. On the other hand, as I shared in my previous commentary, “Is the bull market getting tired?”, there is no particular reason for stocks to rise significantly.
The main story there is how the date for the Fed to start cutting interest rates keeps getting pushed back further and further. Recall that there was a time when people expected it to happen in December 2023. Now we abolish his May 1st.cent And hope June 12thth is the starting line.
It didn’t help matters that Thursday morning’s PPI report was higher than expected. +0.6% compared to the previous month was twice as much as expected.
Following the news, bond interest rates rose and stock prices fell. Furthermore, the probability of a rate cut in June has been reduced to 60%, compared to probably over 80% just a few weeks ago.
I feel bad saying this to my friends, but I think the probability of production cuts in June is at most 50%…probably lower.
That is because the Federal Reservedata dependent“As they like to tell us, the latest data shows that inflation is still too high. This includes readings of sticky inflation from earlier this week, which remain at 4%. and we are not progressing fast enough towards the desired 2% target.”
This begs the question of whether June is really a possibility if we don’t get enough inflation indicators in the short term to clearly believe that high inflation is over and buried. There is. This is especially true given the Fed’s statement that it’s better to cut rates too late than too soon, as it doesn’t want to reignite the smoldering embers of inflation.
The most important event in the economic calendar is March 20thth Overview of the Fed’s interest rate decisions and quarterly economic forecasts. No one on the planet is expecting a rate cut at this meeting. But they will scrutinize every word in the report, every word and look on Mr. Powell’s face at the news conference, looking for clues about what will happen next.
No doubt someone at the press conference will ask Mr. Powell what he means by his recent statement that interest rates will be cut.not farPerhaps he responded with a more “data-driven” story and a “better late than never” comment, suggesting to investors that even June may be too early for a parade of rate cuts. is high.
If true, that could trigger a long-awaited rebound from current highs. There’s nothing to be scared of. Just a healthy 3-5% rebound after a 25% rally from the October 2023 low.
However, there is no law that requires you to do so. Rather, investors will simply sit through this red light and wait for the green light, which will eventually result in a rate cut. This is what is called his consolidation below 5,200, and while the market average does not move much, there is enough sector rotation.
Some people call it “rolling correction“Each sector tends to decline in turn, even though the market-wide index doesn’t move much. Selling focused on these sectors causes appropriate declines in overripe positions. This , the best way to pave the way for the next healthy bull market.”
Long story short, please stay strong. And look out for companies with healthy growth at attractive prices. POWR Ratings will continue to be your best friend for finding quality stocks.
More on that in the next section…
What’s next?
Check out my current portfolio of 12 stocks packed with great benefits from the unique POWR Ratings model. (Nearly 4x better than the S&P 500 through 1999)
This includes five under-the-radar small-cap stocks that have been recently added with tremendous upside potential.
Additionally, I have one particular ETF that is incredibly well-positioned to outperform the market in the coming weeks and months.
This is all 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 $510.73 per share Friday morning, down $2.63 (-0.51%). Year-to-date, SPY has increased 7.45%, compared to the benchmark S&P 500 index’s increase 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.
more…
post Should investors be wary of this market? It first appeared stocknews.com
[ad_2]
Source link
