Tag: market commentary

Investor Alert: Hidden Gem for Stocks Found in Friday Report

Posted on by The INO.com Team

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.Click Here to learn more about Reitmeister Total Return

SPY – Stocks have been pressing lower of late as the bond rates continue to rise. This had the S&P 500 (SPY) dangerously close to the 200 day moving average. Yet hidden in the Friday Government Employment report was a clue that sparked a rally and maybe puts an end to recent market weakness. Read on below for full details….

Right now the most important thing on investor’s minds is the dramatic rise in bond rates, and how that makes stocks less attractive. I tackled that subject pretty thoroughly in my previous commentary this week. Be sure it read now if you haven’t already:

When is the Stock Bouncing Coming?

The quick answer to the above question, is that the bounce could be forming now as stock flirt with the 200 day moving average at 4,206 for the S&P 500 (SPY). That is the red line in the chart below.

On the fundamental front, if rates keep ripping higher, then it will only put more pressure on stock prices. I sense that 5% is a logical top for 10 year rates…but who says that the market is logical?

Also note on the fundamental end of things that the economic reports continue to come in positive. Even 20 months into the most aggressive Fed rate hiking regime in history, GDP estimates continue to be robust.

GDP Now has it their Q3 estimate all the way up to +4.9% bolstered by the most recent ISM Manufacturing report. Further, the Blue Chip Economist panel sees +2.9% as the more logical growth trajectory.

If I were to place a bet in Vegas I would say the Economists are much closer to the final number. Regardless, it is hard to look at these results and see a recession coming…and therefore it is hard to be truly bearish.

On top of that the Government Employment Situation report came out Friday morning much hotter than expected. Since so much of the initial market reaction is based on just reading the headline…then yes stocks sold off early in the session.

Gladly, as prudent investors dug into the details they discovered a hidden gem in the report. That being month over month wage inflation down to only 0.2% which means we are ebbing ever closer to the 2% inflation target for the Fed as this “sticky” form of inflation becomes unstuck at such high levels.

As this new spread…so too did the stock gains. As I put this commentary to rest with 90 minutes left in the Friday session we have a +1.4% result for the S&P 500 and nicely above recently resistance at 4,300.

Back to the big picture conversation about higher rates….

Yes, stock prices are down of late as “rates normalize” to more traditional historic levels. Meaning we are no longer enjoying the artificially low rates we that have been in hand the past 15 years.

Once everyone makes this adjustment to the new world view of rates…and realize the world is not falling apart…they will be compelled to put their money into the best stocks. And maybe Friday’s rally is an early sign of that taking place.

So, which are those best stocks, you ask?

Read on below for the answer…

What To Do Next?

Discover my brand new “2024 Stock Market Outlook” covering:

  • Bear Case vs. Bull Case
  • Trading Plan to Outperform
  • What Industries Are Hot…Which Are Not?
  • Top 11 Picks for the Year Ahead
  • And Much More!

Gain access to this vital presentation now by clicking below:

2024 Stock Market Outlook >

Wishing you a world of investment success!


Steve Reitmeister
…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com & Editor, Reitmeister Total Return

SPY shares were trading at $430.05 per share on Friday afternoon, up $5.55 (+1.31%). Year-to-date, SPY has gained 13.70%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

When is the Stock Bounce Coming?

Posted on by The INO.com Team

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.Click Here to learn more about Reitmeister Total Return

SPY – Higher bond rates have been the main catalyst behind lower stock prices. Yet with the S&P 500 (SPY) pressing down towards the 200 day moving average we are all wondering when stocks will finally bounce. Steve Reitmeister reviews the facts in hand to help investors navigate the choppy investment waters. Read on below for the full story…

In last week’s commentary I focused on the following relationship:

Rates Up > Stocks Down

Now everyone is quite aware of this dynamic explaining the continued pressure on stock prices with the S&P 500 (SPY) at the lowest level in months.

However, what remains unclear to most is… WHY it this happening…and how much higher could rates go?

That will be the focus of this week’s Reitmeister Total Return commentary.

Market Commentary

The reason for higher long term bond rates is quite simple…and actually has nothing to do with current inflation issues which are likely to fully moderate in the coming 12-24 months. What this boils down to is the following term that you will see more and more:

Rate Normalization

Meaning that rates have been “abnormal” ever since the Great Recession as the Fed used every tool imaginable to crush interest rates to reinvigorate the economy. The ante got upped during Covid with rates tumbling down to a historic low of 0.5% for the 10 year Treasury.

Let’s review this 60 year chart to appreciate the trends over the years:

There really have been 2 abnormal periods in history. We just spoke about rates tumbling to all time lows after the Great Recession through Covid (2008-2020).

Now check out the spike in rates during the hyper-inflation period of the late 1970’s. This peaked in 1982 thanks to the hard work of then Fed Chair Volker.

So what are normal rates for the 10 year Treasury?

There is some debate, but most say 4.5% to 5%.

Where are we today? Smack dab in the middle at 4.79%.

Yes, that is much higher than recent memory…but not really high in the grand scheme of history. And thus not necessarily a reason for the economy to come to a screeching halt and thus not a reason to flee stocks in the long run.

Yet in the short run, some adjustments to investment portfolios have to be made. For example, with yields this high we all can get a decent rate of return with bonds and money market accounts without taking any real risk. This is having more money flowing out of stocks towards bonds.

That is not a brand new phenomena as bond fund flows have been very positive since late 2022. The greater question now is when will we hit peak rates…and thus when will the stock market carnage end?

If you line up 10 investment experts, they will give you 10 different opinions. Because to be honest, 90% of them didn’t really see this coming. And thus cant give a straight answer on how/when it ends.

That is why I thought valuable to draw back to the picture of the historical rates. When you remove the abnormal highs and lows you find that we are pretty close to normal. So, it is fair to imagine that 5% could present a reasonable near term top for rates.

Unfortunately…who says that the market is rational?

The bond market gets hit with waves of fear and greed just like the stock market. And thus we could easily go well past 5% bond rates before things correct back to normal levels. And yes, that would be bad for stock prices.

Truly we are at a critical juncture. Not just about the direction of bond rates, but also stocks are on closing in on the most important technical level. More on that in the next section.

Price Action & Trading Plan

Moving Averages: 50 Day (yellow), 100 Day (orange), 200 Day (red)

There is no way to paint this picture in a positive light. As you can see, this past month stocks have broken down past support at the 50 day and 100 day moving averages. So obviously now we are all wondering how well the 200 day moving average will hold up at 4,202.

Personally, I like the odds of seeing solid short term support at this level. BUT if the 10 year Treasury rates start raging above 5%…then I suspect stocks will spend some time below the long term trend line only adding to recent negativity.

As for our trading strategy, we are 100% invested and have taken advantage of the recent dip to add stocks & ETFs that should excel when a bounce finally ensues. But a serious break below the 200 day moving average would have me consider more conservative measures. Like perhaps retreating to 70-80% long.

Why not more conservative or even bearish?

Would need to see more serious reason to believe in a recession forming that would provide a fundamental reason for extended stock downside. OR a deeper break under the 200 day that would have to be heeded in our strategy.

Either one of these would have use getting less long stocks…and potentially buying inverse ETFs to profit from downside.

Hard to explain why…but I have little fear of that at this moment. And just sense a bounce should soon be in hand with the picks in our portfolio leading the parade higher.

What To Do Next?

Discover my brand new “2024 Stock Market Outlook” covering:

  • Bear Case vs. Bull Case
  • Trading Plan to Outperform
  • What Industries Are Hot…Which Are Not?
  • Top 11 Picks for the Year Ahead
  • And Much More!

Gain access to this vital presentation now by clicking below:

2024 Stock Market Outlook >

Wishing you a world of investment success!

About the Author

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

2024 Stock Market Outlook

Posted on by The INO.com Team

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.Click Here to learn more about Reitmeister Total Return

SPY – The time to think about the 2024 stock market is now. Will it be a bull or bear? Where does the S&P 500 (SPY) end the year? And what are the top picks to outperform? Investment veteran Steve Reitmeister does his level best to answer all these questions. Just read on below…

 

Tell me if you see the pattern…

2019 Bull Market

2020 Bear Market

2021 Bull Market

2022 Bear Market

2023 Bull Market

Given the above, the logical question on everyone’s mind should be…Will the bear market come back again in 2024?

This led to me record a brand new presentation this week that covers vital topics including:

  • Bear Case
  • Bull Case
  • And the Winner Is???
  • Trading Plan to Outperform
  • Top 10 Picks Right now
  • Pick #11 Coming Monday Morning
  • And Much More!

Gain access to this vital presentation now by clicking below:

2024 Stock Market Outlook >

 

Let me pull back the curtain on this presentation just a little more so you can appreciate why now is the perfect time to watch this presentation…

The goal was to give you a running head start to outperform in the year ahead.

If it sounds early to do that now please realize that most of the market is run by institutions. And they plan out several months in advance.

So if you are not thinking of 2024 right now…you are behind the curve.  

First off, we need to settle the bull vs. bear debate.

Will it follow the on/off pattern of the last few years?

Or will new market dynamics create a shift in the outcome?

And where does the S&P 500 (SPY) end up by years end?

The Fed is most certainly a big part of that market outlook equation. And to be honest, it has become a more complicated riddle of late…but solving that puzzle is truly the key to outperformance in the year ahead.

Next up we need to review which stock groups are likely to lead the way:

  • Large Caps vs. Small Caps?
  • Growth or Value Stocks?
  • Tech Still in Charge…Or Time for Others to Shine?

Considering the above led me to my current portfolio of 11 hand selected trades (4 ETFs and 7 stocks focused on the groups most likely to outperform).

All this and more awaits you in my new presentation. So please click below to start watching now:

2024 Stock Market Outlook >

Wishing you a world of investment success!

Steve Reitmeister
…but everyone calls me Reity (pronounced “Righty”)
CEO StockNews.com & Editor of Reitmeister Total Return

About the Author

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

Stock Market vs. Bond Rate Relationship Revealed

Posted on by The INO.com Team

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.Click Here to learn more about Reitmeister Total Return

SPY – The stock market is affected by many things like the Fed and the economy. However, there is not enough talk about how the movement of bond rates makes stocks more or less attractive. Like how the S&P 500 (SPY) is having a terrible September as bond rates explode higher. Learn more about this dynamic relationship and what it means for stock prices in the days ahead.

Investors have long appreciated the relationship that when rates go up…stocks go down.

That was a prime catalyst behind the 2022 bear market. Yet investors were encouraged in 2023 that inflation was coming under control…and thus rates would head lower in the future. This had stocks back on the rise for the majority of the year.

Then on 9/20 the Fed said “NOT SO FAST!” which had rates spiking again…and investors fleeing stocks.

Did that story take a turn for the better on Thursday?

Let’s review in this week’s commentary.

Market Commentary

The best place to start our conversation is with this 1 month chart showing the rise of the 10 Year Treasury rate vs. the decline of the S&P 500 (SPY):

The inverse relationship is quite apparent. As rates accelerated higher later in the month…the stock decline accelerated as well.

The reasons behind the higher rates was explained in detail in my commentary after the 9/20 Fed announcement. Here is the core section for our discussion today:

“…Nutshell of the Wednesday Fed announcement.

The economy is doing better than we expected…so it’s going to take a bit longer to bring down inflation to target level…the good news is that we really believe we can do it without creating a recession.

So why did stocks go down on this seemingly positive outlook?

Because the dot plot of rate expectations by Fed officials now has the end of 2024 rate still way up at 5.1%. That was revised higher from the previous estimate of 4.6%.

Yes, this most certainly fits in with the Fed narrative of “higher rates for longer”, but much longer and higher than investors previously anticipated.”

Now let’s narrow in on what happened with 10 year Treasury rates on Thursday:

This one day chart shows how rates continued to spike early in the session Thursday up towards a high of 4.688%. Yet dramatically reversed course ending the session down at 4.577%. That also helped stocks enjoy one of their best sessions in a while. (The bond sell off extended into Friday which increases the odds we have seen peak rates).

Please remember that rates were down around 3.8% just a couple months ago. This is a dramatic move that may have finally run its course. If so, then it helps improve the odds that we have made a bottom with stocks moving higher from here.

The biggest surprise I see with the recent rise in bond rates is how the likelihood of a rate hike at the November 1st Fed meeting has dropped from 62% just a month ago to only 19% as of today. Further the idea of a raise happening by the December 13th meeting has declined to 36%.

This information just doesn’t jive with Fed statements in September which seemed to indicate strong likelihood of at least one more hike. Nor does it jive with soaring bond rates. Again, perhaps another clue that the rally in bond rates is overextended and ready to retreat which is good for stocks.

Pulling back to the big picture it is very hard to have a bear market without a recession forming. And right now the odds of that are fairly low.

That is why I believe that this sell off is finding a bottom around current levels. And perhaps no further than the 200 day moving average closing in on 4,200. That is the downside possibility.

Whereas the upside potential this year has us retesting the highs of 4,600 seen in late July. And then next year likely cracking above 5,000.

Thus, I recommend staying fully invested in this market. The key to success is picking the best investments. And that is what we will cover in the next section…

What To Do Next?

Discover my brand new “2024 Stock Market Outlook” covering:

  • Bear Case vs. Bull Case
  • Trading Plan to Outperform
  • Top 11 Picks for the Year Ahead
  • And Much More!

Gain access to this vital presentation now by clicking below:

2024 Stock Market Outlook >

Wishing you a world of investment success!


Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return

About the Author

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

How Low Will Stocks Go?

Posted on by The INO.com Team

Please enjoy this updated version of weekly commentary from the Reitmeister Total Return newsletter. Steve Reitmeister is the CEO of StockNews.com and Editor of the Reitmeister Total Return.Click Here to learn more about Reitmeister Total Return

SPY – The Fed threw some gasoline on the stock sell off fire last week. With that stocks are exploring new lows with the 200 day moving average in play at 4,195 for the S&P 500 (SPY). Is it time to buy stocks…or run for cover? 43 year investment veteran Steve Reitmeister shares his latest insights including how low he expects stocks to go. Plus information on his top 11 picks for today’s volatile market. Read on below for more…

 

Stocks were floating around in a well-defined trading range coming into the September 20th Fed announcement. Unfortunately, the increased clarity on what they mean by “higher rates for longer” has the market heading to new lows.

This has rattled the cage of some investors evoking questions like:

Is the bull market already over?

How low do we go before stocks bounce again?

We will answer all that and more in this week’s Reitmeister Total Return commentary.

Market Commentary

4,600 on the S&P 500 (SPY) was always too high for this market. Especially true when it was unclear when the Fed would be done tapping the brakes of the economy. Thus, it made sense for investors to take some money off the table in early August leading to a natural pullback.

Next up the Fed made it clearer what “higher rates for longer” meant at their 9/20 press conference. This included the September release of their Summary of Economic Projections which included insight that Fed officials now expect rates to be around 5.1% at the end of 2024…much higher than the previously stated level.

This has led to a massive Risk Off adjustment as it does marginally increase the odds of recession (and bear market). But more succinctly it means that bonds and interest bearing securities have become more attractive relative to stocks thanks to higher yields. Or to put it another way:

Rates Up > Stocks Down

Now let’s pull back to the big picture. Even after this realignment of funds, investors have to appreciate that the risk of recession is still very low. The Fed is simply choosing a path of lightly tapping on the brakes over a longer period of time to increase the odds of soft landing.

This is a better plan than violently slamming on the brakes with MUCH higher rates in the short run which increases the probability of an economic wreck in the long run.

This all shows up loud and clear in how they adjusted their economic forecast for 2024 higher to +1.5% GDP growth. Not stellar when 2.7% is the long term average. However, it sure is better than the 1.1% they previously projected.

Now let’s consider some other GDP indicators.

Goldman Sachs is staying put at 15% odds of recession in the coming year. Note that economists are told to start at 10% probability no matter how glorious the economy looks. So this means their teams sees very little reason for concern.

Next we will check in with the famed GDPNow model from the Atlanta Fed. That is shockingly high at +4.9% for Q3. That is just based on 1 month of data so far and likely will come down a notch when the early October reports are released like ISM Manufacturing and Retail Sales.

Likely the GDPNow model will fall in line with the Blue Chip Economist panel that right now stands at +2.9% for Q3. Last quarter the panel forecast was much closer to the mark.

When you boil it down it is hard to see that the odds of recession are that high. And thus hard to become bearish…and thus hard to see stocks falling much further. Will discuss more about that in the next section…

Price Action & Trading Plan

Moving Averages: 50 Day (yellow), 100 Day (orange), 200 Day (red)

We have been under the 100 day for a few sessions. So, it means that the 200 day moving average @ 4,195 is now in play (about 2% below Thursday’s close).

I didn’t think that was probable a week ago. But the Fed’s updated forecast means that the highly anticipated lowering of rates, and reacceleration for the economy, are a bit further down the road.

It doesn’t end the bull market story. Rather it just delays when it will really show up in improved earnings growth, which is the prime catalyst for higher share prices.

So yes, the odds of testing the 200 day moving average has increased. That is a healthy correction for the overall market after being near 4,600 back in July.

That correction will shake out the complacency that got built up during the overextend 5 month rally from March til August. This creates a healthy reset for stocks bringing them down to a better valuation point that will have investors more readily hitting the buy button once again. My guess is that will be at the 200 day moving average or slightly above.

This new information on the Fed also has me taking back my previous prediction of 4,850 for year end S&P 500 level. That is asking too much from the market at this time.

Rather, I think a touch of Santa Claus rally, plus increased clarity from the Fed at their next 2 meetings, will give investors the confidence to bid stocks back up to 4,500 to 4,600 by year end. And then be primed to make new highs above 5,000 next year.

The key to superior returns is determining the best stocks & ETFs to put into our portfolios to stay a step ahead of the pack. And that is what you will find in the next section…

What To Do Next?

Discover my current portfolio of 7 stocks packed to the brim with the outperforming benefits found in our POWR Ratings model.

Plus I have added 4 ETFs that are all in sectors well positioned to outpace the market in the weeks and months ahead.

This is all based on my 43 years of investing experience seeing bull markets…bear markets…and everything between.

If you are curious to learn more, and want to see these 11 hand selected trades, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!


Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return

About the Author

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.