The speed of the early August correction was impressive. But so too was the mid month bounce where we saw the S&P 500 (SPY) in the plus column for 8 straight sessions.
Tuesday ended that streak with a little dip into the red. Yet the rise to nearly 5,600 has us just a stone’s throw away from the all time highs at 5,669.
In today’s commentary I will focus on updates to our market outlook, trading plan and top picks to stay on the right side of the market action.
Market Commentary
There is no longer a need to look at the technical picture for stocks as we quickly broke back above the 100 and 50 day moving averages. In hindsight it is clear the early August sell off was mostly about the worldwide panicked sell off from the unwinding of the Japanese Yen Carry Trade.
All talk of increased recession fear was non-sense. In fact, Goldman Sachs just decreased their recession outlook for next year from 25% to 20%. Plus they said it would likely decline to 15% if the next Government Employment Report showed healthy job gains.
Note that the base case for all economists and market strategists is that there is 10% chance of recession. Meaning even if everything looks like rainbows and unicorns out there, you still need to assume 10% of recession forming. So, saying 20 or 25% chance is not scary at all.
What should be clear to you by now is that in the short run anything can happen with stock prices. Up...down...sideways...or all 3 in a volatile mix that may have you wanting to lose your lunch.
The cure is to pull back and look at the big picture. And without any serious threat of recession, then it’s nearly impossible to be bearish on stocks.
This is ESPECIALLY true as we are about to enter a period of rate cuts from the Fed. That form of accommodation is likely to increase GDP growth...earnings growth...and yes, stock prices.
And that is why in the months ahead you will continually hear the chant of: Don’t Fight the Fed!
That is why the Reitmeister Total Return portfolio is 100% long again with a mix of Risk On positions that will outperform on the good days for the market...and understandably be lackluster on the down days.
Which will it be tomorrow? Or next week? Or next month?
Don’t know...Don’t care.
The key is to align ourselves with the primary long term trend, which is most certainly bullish. Then pack your portfolio with the most fundamentally sounds stocks. That is easy to do with the POWR Ratings on your side.
And then let the chips fall where they may on a daily basis.
If a bit of market downside, then hold on to your biggest losers as they will bounce back more than others. Then consider buying the dip on new selections at discounted prices.
If market upside emerges, then keep riding the momentum on winners. And if any losers are in the mix, even as the overall market pushes higher, then give them a short leash. If they don’t perform up to standards, then kick them to the curb and find another impressive POWR Ratings pick to replace it with.
The next section will shine a light on my favorite POWR Ratings stocks now...
What To Do Next?
Discover my current portfolio of 11 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999).
All of these hand selected picks are all based on my 44 years of investing experience seeing bull markets...bear markets...and everything between.
And right now this portfolio is beating the stuffing out of the market.
If you are curious to learn more, and want to see my 11 timely stock recommendations, then please click the link below to get started now.
Steve Reitmeister’s Trading Plan & Top 11 Stocks >
Wishing you a world of investment success!
SPY shares rose $0.15 (+0.03%) in after-hours trading Tuesday. Year-to-date, SPY has gained 18.29%, 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.
More Good Times Ahead for Stocks? StockNews.com
