(Please enjoy the latest investment insights from the Reitmeister Total Return portfolio).
The market is following the typical holiday season script. That is where we find very little market moving news with upward bias to stock prices. What we call the Santa Claus rally. And gladly, that is exactly what is happening now.
There might not be a ton of fresh headlines for investors to digest, but I still have some worthwhile insights to share.
Market Commentary
We have a deal.
We don’t have a deal.
No we have a deal and it’s the greatest ever.
Hey…didn’t we come to a similar deal several weeks ago and all they needed to do is sign it? And thus we are really no further ahead.
Shut up common sense. We are trying to enjoy the idea that something new and exciting has happened so we can keep rallying to new highs.
That pretty well sums it up. We really are no further ahead in making a trade deal than the press conference in the oval office several weeks ago. But why let that get in the way of a rally to record highs.
However, as I am coming to realize, and shared in recent commentary and webinars…the China trade deal doesn’t really matter as much as previously advertised. Why? Because the economy continues to grow even as this dark cloud has lingered over head.
I am not saying that no deal is good. But it just isn’t as devastating as we previously thought as proven by the ample economic growth during this time. It just would be more robust with this deal ironed out.
Speaking of the economy we got a round of positive news on Monday. That came in the form of the PMI Flash report showing gains in both manufacturing and services.
As for manufacturing, which has been the biggest concern of late, that came in nicely above the key 50 level at 52.5. Services climbed from a surprisingly low 51.6 up to 52.2. Putting all the pieces together the composite result was above last month at 52.2 and hopefully gets reflected in the more widely followed ISM versions of these reports in early February.
Barring some big surprise, there will not be much market moving news between now and that first week of January. And if true, then the overall market will match what I said in the intro paragraph. That being typical holiday season action with an upward bias.
So yes, the S&P will likely crack above 3,200 before the year is out. But wouldn’t expect explosive upside at this stage. More likely modest upside with a lot of sector rotation as investors review their portfolio to get ready for 2020.
Early in 2020 I will put out a more elaborate Stock Market outlook for RTR. But here is the basic idea.
Bull market til proven otherwise = stocks will continue to move higher. Just don’t waste your time dreaming of 30% gains as the S&P saw in 2019. That was really more about rising back from the devastating Q4 correction. So easy to see ample gains off those painful lows.
More likely 5-10% gains for the overall market…but of course there are always places to find outperformance. And that is getting back to better stock selection blending healthy growth with momentum and value. That is the formula that has led to a healthy increase in green arrows in the portfolio of late…and should continue to pay the bills in the year ahead.
So more on the market outlook in a couple weeks. For now just assume upward bias + sector rotation to close out the year.
Portfolio Update
The market has gained in 4 of the last 5 sessions and our portfolio came along for the ride. However, there seems to be a growing divide between the have’s and have nots.
Yes, it is quite possible that is just a combination of tax loss selling that makes weak stocks weaker. And window dressing that makes strong stocks only stronger.
The key is what happens in early January. I believe our portfolio is well constructed for those times. But any stock that doesn’t play ball will be replaced.
OK…that is the big picture. Now let’s drill into the position by position specifics:
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Wishing you a world of investment success!
Steve Reitmeister
…but my friends call me Reity (pronounced “Righty”)
CEO, Stock News Network
Editor, Reitmeister Total Return
shares were trading at $320.94 per share on Friday morning, up $1.61 (+0.50%). Year-to-date, has gained 30.21%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
