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 wish to win? 40 yr funding professional Steve Reitmeister solutions all that alongside along with his buying and selling plan and high picks. Learn on beneath 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 beneath 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 lately 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 at this time on answering these questions and getting our portfolios able to profitably commerce the end result.
Market Commentary
Let’s begin off with a 1 yr 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 beneath this key long run development line in bear market territory. Nevertheless, you may also see that it has been over 4 months since making lows and the final 2 months breaking again above this key degree.
Those that consider extra within the advantage of worth motion would say the bulls have the higher hand at the moment.
Nevertheless, it’s straightforward to blast massive holes in that idea by reviewing all the wonderful bear market rallies that happened previously 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 yr bear market.
The purpose is that the battle for the soul of the market remains to be earlier than us. And fairly presumably that battle is finalized in March as we hit these key dates with market transferring occasions:
3/10 Authorities Employment Scenario. Hold a detailed eye on the wage inflation knowledge that was far too sizzling within the February report which began the latest downturn.
3/14 Shopper Value 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 last few months.
3/15 Producer Value Index (PPI). Insiders know that that is extra essential than CPI as a result of the costs paid by producers at this time leads to the ultimate product and companies within the months forward. (Present PPI results in future CPI).
3/22 Fed Assembly with Curiosity Charge Choice & Financial Projections. Most anticipate 25 foundation level hike. The actual difficulty is whether or not the Fed sounds kind of Hawkish than the early February assembly.
After I take a look at these occasions, together with latest knowledge that foreshadows what they might inform us, plus latest statements by Fed officers…I can’t 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:
Increased Charges on the Manner (5%+)
+
Increased 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 way in which.
Little doubt this similar rational explains why famed hedge fund supervisor David Einhorn was just lately on report for the next:
David Einhorn says traders ought 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 likely be stay grenades thrown into the market fray. When the smoke clears I think we are going to get away of the vary with both bulls or bears topped victorious.
Once more, given the details in hand proper now I might guess on the bears having the victory parade. Nevertheless, it’s good to maintain an open thoughts to the brand new proof because it rolls in. If really bullish, then I might be very happy to shed my bear coat and wave the bullish flag proudly.
Only one little bit of warning…bulls could 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 latest speeches clarifying charges will climb above 5% and keep in place by means of yr finish ought to settle down most traders from getting forward of themselves.
Keep opened minded to the brand new details as they avail themselves. Simply understand the scales are nonetheless presently 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” yr 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 Complete Return & POWR Worth
SPY shares have been unchanged in after-hours buying and selling Friday. Yr-to-date, SPY has gained 5.69%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.
In regards to the Writer: 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 Complete Return portfolio. Be taught extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.
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