The battle for the soul of the inventory market (SPY) is at stake in March. Why is that? What are the important thing occasions? And are bulls or bears extra prefer to win? 40 12 months funding professional Steve Reitmeister solutions all that alongside together with his buying and selling plan and prime picks. Learn on under for the complete story.
Shares discovered the underside finish of the present vary on the 200 day transferring common (3,940) with just a few makes an attempt to interrupt of late. Most notably Thursday the place a great deal of the session was spent under the road. However then got here ample assist adopted by an enormous up day on Friday.
What does all of it imply?
That bulls and bears are fairly evenly matched today which retains us caught in a buying and selling. The extra significant query is WHEN can we get away of the vary and WHAT would be the catalyst?
We’ll focus our time as we speak on answering these questions and getting our portfolios able to profitably commerce the result.
Market Commentary
Let’s begin off with a 1 12 months chart of the S&P 500 (SPY) to understand how vital the 200 day transferring common has been in framing exercise.
Sure, more often than not has been spent under this key long run pattern line in bear market territory. Nonetheless, it’s also possible to see that it has been over 4 months since making lows and the final 2 months breaking again above this key stage.
Those that consider extra within the advantage of value motion would say the bulls have the higher hand at the moment.
Nonetheless, it’s straightforward to blast giant holes in that idea by reviewing all the wonderful bear market rallies that passed off up to now earlier than the market cratered as soon as extra. Most notable could be the better than 20% rally that was formally referred to as a brand new bull market in late 2008 earlier than making a lot decrease lows within the first quarter of 2009.
And only for good measure, please try how the identical factor occurred in late 2002 earlier than early 2003 introduced a painful conclusion to that three 12 months bear market.
The purpose is that the battle for the soul of the market remains to be earlier than us. And fairly probably that battle is finalized in March as we hit these key dates with market transferring occasions:
3/10 Authorities Employment Scenario. Maintain an in depth eye on the wage inflation information that was far too sizzling within the February report which began the current downturn.
3/14 Client Worth Index (CPI). The important thing being the month over month tempo to see if we’re heating up just like the February report…or cooling down like the previous couple of months.
3/15 Producer Worth Index (PPI). Insiders know that that is extra necessary than CPI as a result of the costs paid by producers as we speak leads to the ultimate product and companies within the months forward. (Present PPI results in future CPI).
3/22 Fed Assembly with Curiosity Price Resolution & Financial Projections. Most anticipate 25 foundation level hike. The true challenge is whether or not the Fed sounds roughly Hawkish than the early February assembly.
Once I take a look at these occasions, together with current information that foreshadows what they could inform us, plus current statements by Fed officers…I can not assist however to proceed to be bearish in my market outlook.
Why?
Due to the next equation I’ve shared earlier than, however deserves repeating:
Larger Charges on the Manner (5%+)
+
Larger Charges in Place til at Least Finish of 2023
+
6-12 months of lagged financial influence
+
Already weak financial readings
=
Fertile soil to create recession and thus extension of the bear market with decrease lows on the best way.
Little doubt this similar rational explains why famed hedge fund supervisor David Einhorn was not too long ago on report for the next:
David Einhorn says traders needs to be “bearish on shares and bullish on inflation’
Till the Authorities Employment Report on 3/10 I might pay ZERO consideration to the value motion contained in the vary. Simply meaningless noise.
From that time ahead these aforementioned catalysts will probably be stay grenades thrown into the market fray. When the smoke clears I believe we’ll get away of the vary with both bulls or bears topped victorious.
Once more, given the info in hand proper now I might wager on the bears having the victory parade. Nonetheless, it’s good to maintain an open thoughts to the brand new proof because it rolls in. If really bullish, then I might be more than pleased to shed my bear coat and wave the bullish flag proudly.
Only one little bit of warning…bulls might get irrationally exuberant studying an excessive amount of into the primary few occasions. This might come to a screeching halt when the Fed steps as much as the mic on 3/22.
Something resembling current speeches clarifying charges will climb above 5% and keep in place by way of 12 months finish ought to calm down most traders from getting forward of themselves.
Keep opened minded to the brand new info as they avail themselves. Simply notice the scales are nonetheless at present tipped within the bear’s favor.
What To Do Subsequent?
Uncover my model new “Inventory Buying and selling Plan for 2023” masking:
- Why 2023 is a “Jekyll & Hyde” 12 months for shares
- How the Bear Market Comes Again with a Vengeance
- 9 Trades to Revenue Now as Bear Returns
- 2 Trades with 100%+ Upside Potential When New Bull Emerges
- And A lot Extra!
Inventory Buying and selling Plan for 2023 >
Wishing you a world of funding success!
Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, StockNews.com
Editor of Reitmeister Whole Return & POWR Worth
SPY shares had been unchanged in after-hours buying and selling Friday. 12 months-to-date, SPY has gained 5.69%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.
Concerning the Creator: Steve Reitmeister
Steve is best 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 Whole 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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