The late summer time correction for shares is over as we now have bounced ferociously from backside. That is simple to see because the S&P 500 (SPY) retains leaping over technical hurdles just like the 50, 100 and 200 day transferring averages. This inexperienced gentle for shares will keep true so long as we keep away from recession. So diagnosing the well being of the economic system is a very powerful factor that traders can do now. After that’s choosing the right shares & ETFs to outperform. That’s precisely what Steve Reitmeister delivers in his most up-to-date market commentary beneath.

Shares have properly bounced from current backside. The important thing ingredient being the decreasing of bond charges that was beginning to crush the soul of inventory traders.

Not solely have we discovered backside, however the S&P 500 (SPY) is again above key technical ranges (50/100/200 day transferring averages) that time to extra bullish upside forward. Additionally serving to issues is the constructive bias for shares in the course of the vacation season…what is usually known as the Santa Claus rally.

Let’s dive in additional to those key dynamics and what it tells us in regards to the investing local weather within the weeks and months forward.

Market Commentary

The bonds charges up > shares down dynamic was the important thing story August by means of October. Some simply talked about it as a case of fee normalization again to extra typical historic ranges. Whereas others talked about the opportunity of extra ominous traits like a debt disaster with severely increased charges > recession threat > bear market consequence.

For now, that disaster argument is swept beneath the rug with the extra benign fee normalization being the extra seemingly situation. Sadly, a brand new potential boogeyman has additionally crept up within the funding dialog. That being the chance that bond charges are coming down due to elevated odds of future recession.

That’s extremely laborious to see from Q3 GDP coming in at a sturdy +4.9% clip. Nonetheless, historical past has many examples of sizzling quarters like this being the final fuel of an increasing economic system earlier than tipping over into recessionary territory.

That is very true in increased inflation environments the place shoppers are afraid of ready too lengthy on purchases on condition that costs can be increased sooner or later. This “pulls ahead” demand to create a stronger GDP studying now…and weaker, typically recessionary readings sooner or later.

May that be occurring now?

That was the main focus of my final commentary you’ll be able to learn right here: The Darkish Aspect of the Current Inventory Rally.

The primary level is that decrease charges is sweet for the inventory market so long as there isn’t a recession forming. Slowing development can be high quality. +4.9% is properly above development and never sustainable. Cooling all the way down to about 2% development could be simply high quality to ease recessionary pressures and preserve the economic system and inventory market rolling merrily ahead.

Properly the up to date estimate for GDP estimate for This fall from GDPNow is true on the right track at +2.1%. At this stage we’re not even 20% executed with the info that can be a part of the ultimate studying. So loads of time for that to enhance or devolve. Our job is to maintain watching it intently which can be a central a part of my upcoming commentaries.

Lastly, a late observe to share because the market went from inexperienced to purple on statements by Fed Chairman Powell. The headline on CNBC reads “Powell Says Fed shouldn’t be assured it has executed sufficient to carry down inflation”.

I’m sorry that could be a foolish excuse for a unload as a result of it echoes 110% of what he mentioned on the 11/1 press convention. There may be nothing new in that take and continues to depart the door open to the Fed elevating charges…or doing nothing at their subsequent assembly.

Curiously the CME’s FedWatch software is now at 14.5% probability of a increase on the subsequent assembly on 12/13 which is down from 24.4% estimate a month in the past. So this isn’t market altering information. Simply a straightforward excuse to take some current buying and selling revenue off the desk earlier than the subsequent leg increased.

For now we now have a basic inexperienced gentle and a technical inexperienced gentle (above 50/100/200 day transferring averages) which says a superb time to be investing in shares. The important thing, as at all times, is figuring out which shares have one of the best likelihood for future outperformance. That’s what we are going to focus on within the subsequent part…

What To Do Subsequent?

Uncover my present portfolio of seven shares packed to the brim with the outperforming advantages present in our POWR Rankings mannequin.

Plus I’ve added 4 ETFs which are all in sectors properly positioned to outpace the market within the weeks and months forward.

That is all primarily based on my 43 years of investing expertise seeing bull markets…bear markets…and the whole lot between.

In case you are curious to be taught extra, and need to see these 11 hand chosen trades, then please click on the hyperlink beneath to get began now.

Steve Reitmeister’s Buying and selling Plan & Prime Picks >

Wishing you a world of funding success!

Steve Reitmeister…however everybody calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Whole Return

SPY shares fell $0.54 (-0.12%) in after-hours buying and selling Friday. 12 months-to-date, SPY has gained 16.49%, versus a % rise within the benchmark S&P 500 index throughout the identical interval.

In regards to the Writer: Steve Reitmeister

Steve is best recognized 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. Study extra about Reity’s background, together with hyperlinks to his most up-to-date articles and inventory picks.

Extra…

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