Is the New Bull Market Set to End Soon?
The S&P 500 (SPY) rose more than 20% from its October lows, marking the start of a new bull market. However, investment veterans fear that this new bull market may end as soon as 6/14. In this market commentary by Steve Reitmeister, a 43-year investment veteran, we take a closer look at the situation.
Why the Bulls Are Optimistic
The bulls believe that a recession is unlikely to occur, and the Federal Reserve stands ready to pivot to lower rates. This allowed stocks to technically start a new bull market given two closes above 4292 for the S&P 500 (TO SPY), marking a 20% increase from the October closing lows.
Why the Bears Are Skeptical
However, the Federal Reserve has always said that high rates are needed until the end of the year, the recent inflation data remains too high, and 2 other major central banks recently raised rates to try and reduce inflation.
Reitmeister’s Opinion
Reitmeister believes that the current high level of the market is due to irrational exuberance leading to some fear of missing out. He suggests that investors should not overreact to the news release on 6/14, as it often takes time for the market to digest the information. Reitmeister also indicated that his balanced portfolio approach for uncertain times helps investors participate in the current market environment while adjusting more bullish or bearish as needed.
Additional Insights: How to Prepare for the End of a Bull Market
As the old saying goes, all good things must come to an end. With that in mind, investors must prepare accordingly as the new bull market may come to an end soon. Here are some practical insights to help you safeguard your investments:
1. Review Your Asset Allocation Strategy
Asset allocation is a crucial part of your investment strategy, as it determines how much of your portfolio goes into different types of assets, such as stocks, bonds, and cash. If you feel that the next bear market is imminent, you may want to adjust your asset allocation to include more bonds or cash and less equities.
2. Consider Investing in Alternative Assets
Another way to protect your portfolio against bear markets is to invest in alternative assets such as gold, real estate, and commodities. These assets tend to perform well during downturns in the stock market and may provide diversification and stability to your portfolio.
3. Avoid Overreacting to Market Volatility
Market volatility is inevitable, and it can be tempting to overreact to fluctuations in the market. However, it’s important to stay calm and avoid making decisions based on emotions. In the long run, a disciplined investment approach that focuses on your investment goals will be far more effective.
4. Stay Informed
Finally, staying informed is key to making wise investment decisions. Keep an eye on economic indicators such as job growth, inflation rates, and interest rates. Knowing the current state of the economy and the market can help you make informed decisions.
Summary
The S&P 500 (SPY) rose more than 20% from its October lows, marking the start of a new bull market. However, investment veterans fear that this new bull market may end as soon as 6/14. Steve Reitmeister suggests that investors should not overreact to the news release on 6/14, and instead should review their asset allocation strategy, consider investing in alternative assets, avoid overreacting to market volatility, and stay informed.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
A new bull market started on Thursday and moved up another notch on Friday. That’s because the S&P 500 (SPY) is up more than 20% from the October lows, marking the start of a new bull market. Unfortunately, signs point to it ending as soon as 6/14. Why is that? And what happens next? 43-year investment veteran Steve Reitmeister explains the rest in his most recent market commentary below.
The bulls believe that a recession is not coming. And that the Fed is ready to pivot to lower rates. This has allowed stocks to “technically” start a new bull market given 2 closes above 4292 for the S&P 500 (TO SPY) which marks a 20% increase from the October closing lows.
But why would the Fed pivot at this time to lower rates?
They have always said that high rates were needed until the end of the year. Also, all the recent inflation data is still too hot and nowhere near their 2% target. And let’s not forget that 2 other major central banks recently raised rates as part of their plans to reduce inflation (Canada and Australia).
So what the heck would make the bulls think a turn to lower rates is coming anytime soon?
My feeling is that we have a mild case of irrational exuberance leading to some FOMO driving stocks to this high level. Next comes the Fed announcement on Wednesday 6/14, where Chairman Powell will likely present the usual talking points from him:
- more work to do
- Higher rates for longer
- We will not lower rates before the end of 2023
- A mild recession is likely before we start lowering rates
- And yes, that will come with an increase in the unemployment rate.
These statements would throw cold water on the bulls, leading to a fairly immediate 3-5% correction. And then the recession watch begins. If that happens, the stock goes down from there. And yes, that very well could be lower than what we endured last October.
Reity, is it possible for the Fed to move to lower rates on 6/14? And what would you do in that case?
Yes, it’s possible… but about a 5% chance given all the information available. Not to mention that the CME FedWatch Tool right now he predicts a 69.4% chance of even higher rates by the time of the July 28 Fed meeting.
So even if they hold the rates steady this time… chances are they’ll go up next time. Which means no pivot is coming.
But if they did make that turn to signal that lower rates are imminent, then yes, I would become more bullish. That would lead to moving up toward 100% invested in stocks with a much higher mix of risk in small-cap stocks and growth stocks that are still trading below fair value.
The key with 6/14 is not to overreact to the 2pm ET news release. Investors often do a poor job of reading between the lines. The key is in what Powell says at the press conference that starts at 2:30 p.m. That’s often when he sets the record straight.
While the Federal Reserve may be ready to become more accommodative, I think all the facts point to it being a foolish idea that will likely send stocks back from current overmature levels.
Stay tuned and trade accordingly!
What to do next?
Discover my balanced portfolio approach for uncertain times.
This helps you participate in the current market environment while adjusting more bullish or bearish as needed.
This strategy was built on the foundation of more than 40 years of investment experience to appreciate the unique nature of today’s market environment.
Right now, it is neither bullish nor bearish. Rather he is confused and uncertain.
However, given the facts available, we will most likely see the bear market come out of hibernation by attacking stocks to the downside once again.
We can gladly enact strategies to not only survive that recession… but even thrive. That’s because, with 40 years of investing experience, this isn’t the first time I’ve been involved in the bear market roundup.
If you’re curious to learn more and want to see the handpicked trades in my portfolio, click the link below to get started on the right hand side of the stock:
Steve Reitmeister’s Trading Plan & Top Picks >
I wish you a world of success in your investments!
steve reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Publisher, Reitmeister Total Return
Shares of SPY were up $0.07 (+0.02%) in after-close trading on Friday. So far this year, SPY has gained 12.84%, versus a percentage increase in the benchmark S&P 500 index over the same period.
About the author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. He is not only the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return Wallet. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
The charge Will the new bull market end on 6/14? first appeared in stocknews.com
https://www.entrepreneur.com/finance/will-the-new-bull-market-end-on-614/453896
—————————————————-