The S&P 500 (SPY) continues to dance around 5,000. Nonetheless, many market commentators are wondering when these large caps are going to hand over the reins to small caps after a 4 12 months advantage. Lets keep in mind that going back 100 years there may be a transparent and decided advantage in smaller stocks. Discover what Steve Reitmeister predicts in the approaching 12 months including a preview of this top 12 stocks to buy now. Read on below for more.
Should stocks break above 5,000 for S&P 500 (SPY) now?
No…that will not be very logical as the beginning date for Fed rate cuts keeps getting pushed further and further into the long run. Nonetheless, it’s a crucial lesson to appreciate that if you end up in a bull market, it’s best to just stay invested as you never know when the subsequent bull run will happen.
Meaning that increasingly the evidence confirms that market timing is a “fools’ errand“. So, the sensible thing to is just stay bullish during bull markets.
That doesn’t suggest that each stock will go up. So, let’s spend our time today discussing the stocks which have one of the best probability to outperform in 2024.
Market Commentary
This was an interesting week for the market. After 2 straight sessions breaking above 5,000, stocks were sent reeling on Tuesday’s much hotter than expected CPI report which pushed out the likely start date for rate cuts.
The -1.37% decline for the S&P 500 was pretty rough. But much more brutal was the -3.96% slashing of small caps.
This “seemed” to set the stage for a consolidation period under 5,000 and maybe a stiffer 3-5% pullback as investors await a clearer signal to move ahead. Yet on Wednesday investors obviously got a case of amnesia as stocks closed the session at 5,000.62. After which Thursday pressed further higher to 5,029.73.
Should you need a narrative to explain this, then it could possibly be twisted that the much weaker than expected Retail Sales report on Thursday should help with the inflation problem. Nonetheless, that does not hold much water when GDPNow estimates still call for +2.9% growth in Q1.
That may be a touch too hot for Fed’s liking. Meaning these are above trend growth levels for the US economy that bring it with it more inflationary pressures.
Little doubt the Fed would like a real “soft landing” reading closer to 1% GDP growth that may include greater moderations of inflationary pressures.
This brings us back to the “animal spirits” a part of investing:
Bull markets will likely be bullish…and bear markets will likely be bearish.
Nobody is arguing that we usually are not in a bull market immediately. So, irrespective of how logical it may appear for the recent stock advance to simmer down until the timing of Fed rate cuts is clearer…it’s also unwise to bet against that primary bullish trend.
To sum it up…stay bullish until there are concerns of recession that may increase the chances of a recession forming.
With that being said, I’ll stick to my earlier prognostications for 2024 that there will not be an incredible amount of upside for the S&P 500 after the tremendous gains the past 17 months from the October 2022 lows. As a substitute, the massive caps, and particularly the Magnificent 7 mega caps, that dominate the index are fully valued to overvalued by most objective standards.
I believe that 5,250 (about 10% above the 2023 close) is a generous upside for the market this 12 months. As a substitute, I foresee the 4 12 months advantage for giant caps over their smaller peers goes to end.
This tide began to turn throughout the late 2023 rally. Yet because the calendar flipped to 2024 investors got back to their old habits.
That being a concentration within the Magnificent 7 stocks that has mega caps pulling way ahead of the pack. That is on clear display within the chart below:
The excellent news is that this past week small caps are taking the baton to lead the stock investing race. And yes, Mega caps pressed pause at the identical time.
My gut continues to imagine strongly that this recent trend has legs. That investors can have to look farther and wider to find stocks worthy of more upside.
This can lead them to small and mid caps which have impressive growth prospects. The important thing being rather more reasonable valuations than their large cap peers. The mixture of superior growth + attractive valuation = greater upside potential.
This investing playbook is on the very heart of the way in which I’m managing my portfolios this 12 months. And gladly leans into the strength of our POWR Rankings system.
This quantitative system analyzes 5,300 stocks by the identical 118 aspects. Meaning it may possibly analyze the elemental and price motion merits of Apple and NVIDIA by the identical yardstick it may possibly measure a $500 million market cap “under the radar” selection.
Indeed, it’s that day by day evaluation of 118 various factors for each stock that unearths those with stellar growth and value characteristics that points to future outperformance. And thus, why this POWR Rankings performance chart dating back to 1999 speaks for itself:
Which top rated POWR Rankings stocks am I choosing presently?
Read on below for the answers…
What To Do Next?
Discover my current portfolio of 12 stocks packed to the brim with the outperforming advantages present in our exclusive POWR Rankings model. (Nearly 4X higher than the S&P 500 going back to 1999)
This includes 5 under the radar small caps recently added with tremendous upside potential.
Plus I actually have 1 special ETF that’s incredibly well positioned to outpace the market within the weeks and months ahead.
That is all based on my 43 years of investing experience seeing bull markets…bear markets…and the whole lot between.
Should you are curious to learn more, and need to see these lucky 13 hand chosen trades, then please click the link below to start 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
SPY shares were trading at $500.82 per share on Friday morning, down $1.19 (-0.24%). 12 months-to-date, SPY has gained 5.37%, versus a % rise within the benchmark S&P 500 index throughout the same period.
Concerning the Creator: Steve Reitmeister
Steve is best 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 within the Reitmeister Total Return portfolio. Learn more about Reity’s background, together with links to his most up-to-date articles and stock picks.
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