(Please enjoy this updated version of my weekly commentary from the Reitmeister Total Return newsletter).
I got an email last week basically saying...
“Reity, you lost your way”.
Meaning that I am a downright fool for not getting more bearish when obviously the market is TELLING YOU that its time to run for the hills. And yes, I appreciate that many of those who believe in price action saw the break below the 200 day moving average as a call to “watch out below”.
But I believe that price action is HORRIBLY distorted by algos and HFTs. And thus there is very little truth in price action. Instead fundamentals much more accurately point the way forward.
Gladly I clung to the True North of the fundamentals allowing us to find ourselves now closer to the all time highs than the recent bottom. And soon the recent lows will become a distant memory...then forgotten altogether.
We will discuss what’s next in the rest of this week’s commentary below.
Market Commentary
Yes, fundamentals are the True North of investing. Gladly they continue to point to the market retaking the previous highs of 4,818 and beyond in the year ahead.
5,000 this year is a near certainty in my book. And my year end target of 5,500 is still very much in play. (These prognostications and more were shared recently in this presentation: 2022 Stock Market Outlook).
Because even with Omicron, and inflation and supply chain issues and, and, and...we find that the economy continues to rebound in healthy fashion. That was on full display this morning with a 57.6 reading for ISM Manufacturing. New Orders points higher at 57.9. And best of all is a new high for the manufacturing employment indicator now up to 54.5.
Earnings season is another place that this economic health is showing up. Yes, high flying names like Apple and Alphabet have shown impressive gains for the tech names.
More importantly, across all companies we see the vast majority beating with estimates rolling higher for the future. The latter part is the most important as it says there is no reason to suspect an economic slowdown any time soon.
And if that is true...then there is little reason to continue on with the charade of this recent sell off. So just as the price action guys were jumping ship, this created capitulation that showered rewards on the fundamental investors who understood what was really going on.
Reity, are you saying the sell off is over?
In short, yes.
The longer answer is that just like much of 2021 volatility is a big part of the stock market equation. So we can take a step back at any time for any reason.
That is why you need to keep your eyes fixed on the long term horizon painted by the positive fundamentals. And that points to higher earnings...and higher share prices.
WHEN those gains are made is unknown and unknowable. But the firmer your grasp on the bullish merits of this market the less likely you will be fooled into selling just as the market is ready to rip higher once again.
What To Do Next?
Discover my top picks for this hectic market environment.
I am referring to the 12 stocks and 2 ETFs in my Reitmeister Total Return portfolio that firmly beat the market last year. And continue to outperform in 2022.
In fact, the 2 ETF trades are plays on the rising interest rate environment and dramatically outperforming the market of late. (Because the Fed is firmly on a rising rate path).
All of these selections are based upon my 40 years of investing experience. Plus we rely heavily on the benefits of the POWR Ratings model with it’s impressive +31.10% annual returns since 1999.
All you have to do to see my current recommendations is to…
Wishing you a world of investment success!
SPY shares were trading at $454.54 per share on Wednesday morning, up $1.59 (+0.35%). Year-to-date, SPY has declined -4.30%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better 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 in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
Is the Stock Market Correction Over? StockNews.com
