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2 Causes Bear Market Scare Might Be Over


The inventory market (SPY) flirted with bear market territory final week earlier than bouncing increased. Nevertheless, this bounce feels totally different…prefer it may truly be the tip of this draw back scare. 40 yr funding veteran Steve Reitmeister spells out the two primary causes that the bulls could be again in cost and that you’d be sensible to hitch them. Learn on for the total story beneath….



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(Please take pleasure in this up to date model of my weekly commentary from the Reitmeister Whole Return publication).

Our portfolio swelled by 5% this previous week… notch above the S&P 500 achieve…and tonic for what ails ya!

Actually, most every little thing went in accordance with our plan with shares hurtling in the direction of bear market territory at 3,855 earlier than assist got here and a hearty bounce ensued. Sadly, we now have seen a number of three day bounces this yr that didn’t cease the downward stress. So it’s laborious to really feel assured that this time is totally different.

However it does feels totally different. Why? That important subject would be the focus of this week’s commentary.

Right this moment we should always discuss 2 actually good the reason why we could have simply seen the tip of the bear market scare in 2022.

Market Commentary

First, and most significantly is the basic outlook. The one logical means for shares to cross over into bear market territory (underneath 3,855) is for there to clear and current hazard of a looming recession.

And sure it’s true that…

Excessive inflation + Hawkish Fed = dangerous soil for inventory market features

However it doesn’t essentially equal a recession both.

This implies there was ample purpose for traders to press pause on the bull market to see what occurs subsequent with the financial system. In that course of they wanted to wring out a lot of the speculative extra within the inventory market and stonk market…Sorry GameStop homeowners…play time is over 😉

This put traders in wait and see mode for indicators of future financial well being or decline. It didn’t assist that the preliminary Q1 GDP studying was shockingly underneath estimates at -1.4%. That kicked promoting into overdrive in the direction of the border of bear market city at 3,855.

But as traders appeared up in the mean time of fact, they noticed that the early Q2 financial information doesn’t say decline…or recession. Actually, as of at present the GDP Now estimate for Q2 from the Atlanta Fed simply rose to +2.5% development price after the welcome launch of stronger than anticipated Retail Gross sales & Industrial Manufacturing experiences. Couple that with one other spectacular earnings season and there may be little purpose to concern a recession is within the air…and thus little purpose to hit the promote button any longer.

That is the guts of the basic story that claims we could also be closing the chapter on this nasty correction…and don’t have to fret about it devolving additional right into a downright bear market.

Now let’s flip over the dialog to the realm of sentiment and the technical aspect of the inventory market equation.

4,000 was logical assist for shares as each century mark has been for the index. But shares minimize beneath it like a scorching knife going by means of butter.

From there the decline sped as much as attain most concern ranges at 3,855 (underneath that = bear market territory). Not surprisingly the market discovered assist simply 3 factors above at 3,858.

That is NOT a coincidence!

That is skilled merchants and computer systems alike saying that there’s simply no LOGICAL purpose to modify from bull to bear.

Granted the motion of the market isn’t at all times logical. However that’s on a each day foundation. Over time logic does prevail because it did on this case.

We crashed by means of logical resistance hurtling in the direction of bear market territory.

THAT WAS CAPITULATION…THAT IS WHERE THE SELLING ENDS AND BUYING BEGINS.

Reity, are you saying it only a gung ho bull market from right here?

We might very properly be on the verge of a 2-3 week FOMO run the place shares go up practically each session. Then unexpectedly you will have damaged again above all key transferring averages and we get again to considering when new highs might be made. Naturally the bear dialog fades within the distance.

I sense that’s the strongest risk. Then again I might additionally see us going right into a consolidation interval between 3,855 and 4,100. In that point bulls and bears wrestle over the result some time longer. But when the basic info stay constructive (aka stable financial development) then even that interval will finish with a break to the upside.

It’s for these causes that I put 4 new trades within the portfolio yesterday to lean extra into the chance for inventory market features. To date, so good on that entrance.

Simply to be 100% clear, I’m not saying the bear market risk is over. The keys to that end result lie within the financial information.

If it weakens, and odds of recession enhance, then we might be again on the three,855 door step shortly. Nevertheless, the longer we go on with out that end result…the extra the bull is again in cost…and the extra doubtless that we return to the outdated highs and past.

For now the danger is to the upside. So if you’re sitting on a pile of money, or giant brief place, then please rethink that call presently as most indicators level increased from right here.

What To Do Subsequent?

Uncover my present portfolio of 11 hand picked shares and three ETFs contained in the Reitmeister Whole Return portfolio which might be excellent for this hectic market setting. The identical portfolio that firmly beat the market final yr and is doing so as soon as once more in 2022.

This service was constructed to seek out constructive returns in all market environments. Not simply when the bull is operating full steam forward. Heck, anybody can revenue in that setting.

But when shares are trending sideways, and even worse, heading decrease…then it’s essential to make use of a distinct set of methods to achieve success.

Come uncover what my 40 years of investing expertise can do you for you.

Plus get instant entry to my full portfolio of 11 shares and three ETFs which might be primed to excel on this distinctive market setting. (This consists of 2 little identified investments that truly revenue from rising charges which proper now could be the very best commerce on the town).

Click on Right here to Be taught Extra >

Wishing you a world of funding success!


Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, Inventory Information Community and Editor, Reitmeister Whole Return


SPY shares . Yr-to-date, SPY has declined -13.76%, 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 Whole Return portfolio. Be taught extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.

Extra…

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