Is 5,000 a Stop Sign for Stocks?

All of us loved the experience as much as 5,000 for the S&P 500 (SPY). However increasingly more it appears like this will likely be a close to time period high for the market. Gladly there are nonetheless methods to carve out inventory market features even on this much less bullish surroundings. Funding knowledgeable Steve Reitmeister shares his up to date buying and selling and high picks for the weeks forward.

The inventory market appears to be caught across the all time highs at 5,000 for the S&P 500 (SPY). And but beneath the floor issues should not so bullish.

Tech shares are lastly giving again a few of their large features and defensive shares are the market leaders. That is NOT a optimistic for these anticipating quick market upside.

Why is that?

And what’s the buying and selling plan from right here?

That’s what we’ll reply on this week’s Reitmeister Complete Return commentary.

Market Commentary

Let’s get some perspective.

The S&P 500 (SPY) is up 43% from the bear market low in October 2022. Thus, there isn’t a denying we’re in a bull market…the primary debate is when/how the following spherical of features will come our approach.

It’s truthful to say that this most up-to-date 20% bull run that began the start of November has grown drained. This makes 5,000 a spot of sturdy resistance particularly when the anticipated catalyst of Fed charge cuts preserve getting pushed additional into the long run.

Friday’s larger than anticipated PPI report, on high of final weeks far too sizzling CPI report, are displaying that inflation is a bit too sticky. Add to {that a} nonetheless too sizzling US economic system (round 3%) and it says that inflationary pressures will seemingly persist.

The Fed has already been extra affected person than most traders predicted. This newest knowledge solely provides them extra cause for pause calling into query whether or not Could or June would be the first charge lower. Proper now I predict neither given the inflationary info in hand coupled with the Fed’s clear choice to not act too quickly lest the flames of inflation spark up as soon as once more.

Or to place it one other approach, they need the embers of inflation to be 100% put out earlier than they decrease charges to spice up the economic system. And with out that enhance to the economic system…then earnings development prospects are just too low proper now to advertise markedly larger inventory costs.

Add all of it up and it says that 5,000 ought to type a high for fairly a bit longer. Maybe all the best way till it’s clear that the Fed will certainly lastly decrease charges.

It’s doable that shares cling to and consolidate round 5,000. But with this a lot time on our fingers til the seemingly first charge lower, then any adverse headline will function straightforward cause for shares to go decrease.

This traces issues up for a reasonably typical 3-5% pullback. Prefer to 4,800 which was the earlier space of resistance that ought to serve properly as assist. This makes for a cushty 4% vary for shares to maneuver round in in the intervening time.

This additionally makes approach for a little bit of sector rotation that comes by way of loud and clear on this 1 week chart:

In essence you’ve gotten the large winners of 2023, resembling Tech and Communication Providers, promoting off with extra conservative teams (Healthcare, Utilities and Shopper Defensive) within the plus column. The one shock is Financials main the best way. However that’s extra about that group rebounding from latest weak point as there was whispers of extra financial institution failures on the best way which haven’t come to fruition.

Buying and selling Plan

One may learn the above and assume its time to take some chips off the desk. However with over 4 a long time of funding expertise beneath my belt I feel it’s unwise to struggle the first pattern.

Which means that we’re little question in a bull market. And it may begin operating at any time for any cause. So to me this isn’t a time to take cash off the desk. Quite, it’s a time to be reflective about what firms you personal going ahead as the general market is close to totally valued.

The straightforward reply is to unload overvalued shares and search to personal extra undervalued picks. That is partially about business rotation the place the aforementioned 2023 leaders of Tech and Communication companies are getting very stretched. Particularly the same old suspects of the Magnificent 7 which have spent an excessive amount of time within the solar.

I’m not saying to be focus solely on the defensive teams like Healthcare, Utilities and Shopper Defensive. Quite I feel it’s about alternatives with Industrials, Fundamental Supplies and Shopper Cyclical that had been center of the pack final 12 months giving them extra room to rise.

On high of that’s transferring to smaller firms. Not saying micro caps. Extra like firms between $1 and $20 billion market cap which may be flying a bit extra beneath the radar providing extra upside potential.

Our POWR Rankings system does a superb job scouting out exactly these sorts of firms with constant development prospects buying and selling at engaging valuations. It’s that mixture that’s all the time in trend…however notably for the remainder of 2024 when the straightforward income have been made on the “title model” shares.

Now it’s time for them to take a again seat and let different worthy gamers take the lead. Extra on my favourite inventory picks within the subsequent part…

What To Do Subsequent?

Uncover my present portfolio of 12 shares packed to the brim with the outperforming advantages present in our unique POWR Rankings mannequin. (Almost 4X higher than the S&P 500 going again to 1999)

This consists of 5 beneath the radar small caps lately added with large upside potential.

Plus I’ve 1 particular ETF that’s extremely properly positioned to outpace the market within the weeks and months forward.

That is all based mostly on my 43 years of investing expertise seeing bull markets…bear markets…and every thing between.

If you’re curious to be taught extra, and need to see these fortunate 13 hand chosen trades, then please click on the hyperlink beneath to get began now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of funding success!

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

SPY shares . 12 months-to-date, SPY has gained 4.51%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.

Concerning the Creator: Steve Reitmeister

Steve is healthier identified to the StockNews viewers as “Reity”. Not solely is he the CEO of the agency, however he additionally shares his 40 years of funding expertise within the Reitmeister Total Return portfolio. Study extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.

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