{"id":59249,"date":"2024-01-23T10:31:35","date_gmt":"2024-01-23T15:31:35","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=59249"},"modified":"2024-01-23T10:31:35","modified_gmt":"2024-01-23T15:31:35","slug":"breakout-for-stocks-or-fake-out-reitmeister","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2024\/01\/breakout-for-stocks-or-fake-out-reitmeister\/","title":{"rendered":"Breakout for Stocks or Fake Out?"},"content":{"rendered":"

Please enjoy this updated version of weekly commentary from the\u00a0Reitmeister Total Return<\/a>\u00a0newsletter. Steve Reitmeister is the CEO of\u00a0StockNews.com<\/a>\u00a0and Editor of the\u00a0Reitmeister Total Return<\/a>.Click Here to learn more about Reitmeister Total Return<\/a><\/p>\n

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SPY<\/a><\/strong> \u2013 Once again stocks flirted with the all time highs for the S&P 500 (SPY). This has happened 2 times recent both leading to failure and this 3rd time doesn\u2019t seem to be the charm either. What is holding stocks back from making new highs? And what should an investor do to find better performance? 43 year investment veteran Steve Reitmeister shares his view including a preview of his 11 favorite stock picks now. Read on below for the answers\u2026<\/em><\/p>\n<\/div>\n<\/div>\n

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In my recent commentaries<\/a>\u00a0I have speculated that we were due for a trading range to digest some of the rampant gains at the end of 2023. However, so far it has been more of a consolidation under the all time highs at 4,796 for the S&P 500 (SPY<\/a>).<\/p>\n

Consolidations are simply much tighter trading ranges. That investors refuse to have a serious sell off while also not being ready to climb higher. Kind of feels like cars revving up at the starting line of a race\u2026lots of noise, but going nowhere.<\/em><\/p>\n

We will discuss more of the reasons behind this consolidation and when stocks should be ready to race ahead.<\/p>\n

Market Commentary<\/strong><\/p>\n

Stocks have tried twice over to make new all time highs above 4,800 for the S&P 500. And twice thwarted at that level followed by share pullbacks.<\/p>\n

Yes it looks like Thursday\u2019s action signals a 3rd<\/sup>\u00a0such attempt. Yet that was a very hollow rally with the usual suspects in the S&P 500 doing well with small caps and other riskier stocks lagging. That is not the sign of a healthy bull. And give very low odds of breaking to new highs.<\/p>\n

(1\/20\/24 update: Yes, the S&P 500 officially made new highs above 4,800 on Friday. I honestly thought it was a fairly hollow rally mostly led by the usual mega cap tech stocks and not such a broad rally. Meaning I do not believe this rally has staying power and likely will fall back below 4,800 this coming week. And at best we consolidate just above 4,800 with little true upside coming in the days ahead).<\/p>\n

Some are pointing to economic data being too weak as the problem. Such as the horrific -43 showing for the Empire State Manufacturing Index on Tuesday.<\/p>\n

While others are pointing to economic data being too strong like Retail Sales being above expectations on Thursday. This had 10 Year Treasury rates breaking further above 4% and also lowered the odds of the first rate cut coming at the March Fed meeting.<\/p>\n

Sorry folks\u2026you can\u2019t have it both ways. And perhaps the answer is that neither of these theses are correct.<\/p>\n

Meaning I don\u2019t believe that investors are truly worried about a looming recession. Nor are they fearful of rates spiking again as they did in the Fall of 2023.<\/p>\n

Simply, the market has come a long way from bear market bottom in October 2022. A total gain of 37% from that valley to now is a lot of profit in a short time when the long term average annual gain for the S&P 500 is only 8%.<\/p>\n

So now is a healthy time for an extended pause. The same way you would take a long break after running a marathon.<\/p>\n

Rest is what is needed. And then gaining the strength for the next run higher.<\/p>\n

In the stock market world that typically comes hand in hand with a pullback in price leading to a trading range. Along with that you will see these investment terms show up more often:<\/p>\n