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We all know that the Fed will cut interest rates at some point this year. This is the worst-kept secret on the planet that explains how we keep hitting new all-time highs in the S&P 500 (SPY). Unfortunately, this creates an interesting predicament for stocks post-rate cuts. Additionally, the 2024 presidential election poses new hurdles. Steve Reitmeister shares insights on the market outlook and previews the top 12 stocks that will outperform. Read more.
Each week, we dig into the details to understand new facts that could change our path. But now, the S&P 500’s fairly profitable first quarter results are nearing (spy), I thought it would be helpful to take a step back and look at the big picture.
This culminated in a new live presentation I gave to Money Show viewers last week, where I updated my 2024 stock market outlook. The good news is that you can now access the webinar replay for free. Watch here >
In this week’s written commentary, we add some new updates to help us stay ahead of the market.
Market commentary
In short, this is a bull market. There’s not much debate about that. But a nearly 50% gain over the past 18 months means it’s getting a little too hot when 8% annualized returns are the norm.
At this point, it’s up to the Fed to decide what happens next. When will we start lowering interest rates?
There is no question that this will happen. It’s just a matter of when investors will continue to race for stocks, even as the starting line has been pushed back again and again.
We believe this will establish a market for classic works. ”Buy rumors and sell news” event.
In other words, stock prices continue to rise in advance of these economic upturns, because it’s no secret that they happen. So when it finally comes to fruition, there will already be significant gains, making it an attractive time to profit.
No…I’m not saying it will happen the moment the announcement is made. Maybe something like the stock price going up another 1-2% on the news. And be prepared for a classic 3-5% rebound. But some of the overbought stocks have sold off by perhaps 10% or more (I’m looking at you, NVDA).
What I shared above will probably happen in June or July. The stock price will then likely rebound from there, only to run headlong into another negative cyclical event.
I’m talking about the typical market pullback that occurs leading up to a presidential election. To make it easier to see this happening, here are graphs from the past three presidential cycles.
2012 Election Reaches High Point in Mid-September
The 2016 election also peaked in mid-August.
The 2020 election will also reach its climax in early September
The decline is noticeable from late summer to early fall. It’s also worth noting that the market is skyrocketing no matter who wins the election.
In other words, markets hate uncertainty. In this way, when there is a question mark over the election results, it leads to a decline in stock prices. And solving that problem = clarity = coming together in the middle.
We do not recommend cashing out later this summer as this seasonal pattern is not guaranteed. But it’s not surprising to take 20-30% off the market.
Or you could just buy a little 3X inverse ETF like TZA and have fun with it. Even if the overall market declines slightly, you will still receive a trading profit of 10% or more.
Once again, stock prices will likely rebound once the election results come out. Then add in the typical Santa Claus cheer for stocks, and it shows that his price target for the end of the year is likely to be 5,500 shares.
This equates to a 17% annual return including dividends. Approximately twice the average annual return.
Unfortunately, when you add this to an even more impressive 26% return for stocks in 2023, I think the bulls are exhausted. This causes the typical incomplete problem 3rd In a bull market, 0-5% is very likely. This digestion period usually paves the way for him to earn excellent profits in the subsequent 2-3 years.
Back to the big picture…I’m still bullish until proven otherwise. The question is which stocks to invest in to outperform the market average.
I will share my favorite handpicked stocks in the next section…
What’s next?
Check out my current portfolio of 12 stocks packed with great benefits from the unique POWR Ratings model. (Nearly 4x better than the S&P 500 through 1999)
This includes five under-the-radar small-cap stocks that have been recently added with tremendous upside potential.
Additionally, I have one particular ETF that is incredibly well-positioned to outperform the market in the coming weeks and months.
This is all based on my 44 years of investing experience, having seen bull markets, bear markets, and everything in between.
If you want to learn more and see our handpicked 13 lucky deals, click the link below to get started today.
Steve Reitmeister’s trading plans and recommendations >
I wish you success in your investments.
Steve Reitmeister…but everyone calls me Leity (pronounced “righty”)
StockNews.com CEO, and Editor, Reitmeister Total Return
SPY stock was trading at $520.79 per share on Tuesday afternoon, up $1.02 (+0.20%). Year-to-date, SPY has increased 9.91%, compared to the benchmark S&P 500 index’s increase of % during the same period.
About the author: Steve Reitmeister
Steve is better known to StockNews readers as “Reity.” He is not only the CEO of the company, but also talks about his 40 years of investment experience in the world. Reitmeister Total Return Portfolio. Learn more about Reity’s career and find links to his latest articles and stock picks.
post Warning to investors: “Buy the rumor, sell the news!” It first appeared stocknews.com