How high can the S&P 500 (SPY) go without the Fed lowering rates? Steve Reitmeister says that 5,000 is a lid on stock prices with likely pullback, trading range and sector rotation to follow. Why is that? Read on below for more.
Last week’s headline exclaimed “5,000 or Bust!”. I still imagine that is true as its easily close by from today’s close at 4,954 (SPY).
The issue is that I do not expect way more upside from there until the Fed starts lowering rates. If that won’t coming in March…then how long do we’d like to attend???
That discussion can be at the guts of today’s Reitmeister Total Return commentary. Plus, we are going to plot a course to profits even when the general market is lackluster for some time.
Market Commentary
Chairman Powell threw investors for a loop last Wednesday when he made it clear that rate cuts are highly unlikely to begin on the March 21st meeting. Since then, stocks have been more volatile and fewer bullish.
I actually have even seen some market commentators calling for a nasty correction or worse. That does not seem crucial. Form of like whenever you pull your automotive as much as a red light that you already know in some unspecified time in the future goes to show green.
You do not get out of your automotive and sit on the curb. As an alternative, you retain your eyes straight ahead and able to step on the gas pedal once more.
When will that light for stocks turn green again?
Unfortunately, the mixture of Powell’s speech and three strong economic reports (Government Jobs, ISM Mfg, ISM Services) pushes it out to the May 1st meeting at a minimum. Without delay, investors put 65% odds of that taking place. And 97% probability of cuts by the point of the June 28th meeting.
These outcomes are most actually possible. Nevertheless, I sense estimates of the speed cuts are a tad too optimistic given the facts in hand. And let’s not forget the immense patience the Fed has exhibited to this point leading investors to greater than once push out the date of the primary cut.
Until that first cut is in hand looks as if the proper setting for a trading range scenario where 5,000 will provide a fairly tight lid on stock prices. The downside is probably going 4,800 which was a previous point of stubborn resistance before the recent break above on January 18th.
Stocks never really idle in these trading ranges. More likely it’s a volatile time with constant sector rotations and changes in market leadership.
Often the strongest groups becomes the weakest and the weakest becomes the strongest. If that’s the case, then let’s take a look at what sectors are hot and never to date in 2024:
Also clever to envision in with the 12 months to this point view based upon market cap:
To nobody’s surprise mega cap tech stocks are absorbing many of the gains with other groups languishing. This was the image for the stock marketplace for much of 2023 until the script got flipped within the latter stages of the 12 months.
I sense the same change of leadership goes to happen in some unspecified time in the future this 12 months. Trading ranges offer nearly as good of a chance of any for that changing of the guard. Meaning this all could also be soon at hand.
So yes, in my Reitmeister Total Return portfolio I proceed to have a small stock bias. But not only any small caps will do. They need to indicate operational excellence as best expressed through a beat and lift earnings report this quarter.
On top of that pullbacks and sector rotation periods often have a greater eye towards value than through the big bull runs. Add this altogether and its prime time for POWR Rating stocks.
That being consistent growth corporations exhibiting operational excellence while trading at reasonable prices. This has at all times been probably the most consistent path to stock market profits and no reason for that to not be the case in 2024.
What are my favorite POWR Rankings stocks now?
Find 12 of them in the following section…
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 all the things between.
If you happen to are curious to learn more, and wish 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 unchanged in after-hours trading Tuesday. 12 months-to-date, SPY has gained 3.93%, versus a % rise within the benchmark S&P 500 index through the same period.
Concerning the Creator: Steve Reitmeister
Steve is healthier 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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