When Will This “Suckers Rally” End?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Indeed this nearly 9% rally for the S&P 500 (SPY) from the recent bottom has been impressive. Then again so was the 18% rally back during the summer that fizzled out before new lows were made. THIS TIME WILL BE NO DIFFERENT! This article will explain why plus how to prepare your portfolio to generate profits even as the market heads lower once again.

Stocks continue to bounce this week even in the face of very weak earnings from many leading bellwether stocks.

Why?

Because…that’s why.

Remember that a rally in the midst of a bear market is no more meaningful than a correction in the midst of a bull market. They can happen at any time for any reason.

The key is to realize the long term trajectory is unchanged and that we have not yet seen the lows for this bear market cycle.

How much higher could this current rally go?

That will be focus of this week’s commentary.

Market Commentary

Let’s start with the year-to-date chart for the S&P 500 (SPY):

I have also layered on the 3 key moving averages:

Red = 50 Day = 3,842

Green = 100 Day = 3903

Blue = 200 Day = 4,113

The first thing to notice on the chart is how many failed rallies there have been already this year before new lows were made. That includes the seemingly impressive 18% rally from June to August that sucked in many investors only to spit them out with a move to new lows.

This rally will also fail. Probably next week for 2 good reasons.

First, is that we are right now pressing up against the 100 day moving average. We could easily run out of steam at this level especially given the way we ended the week.

That being a TERRIBLE earnings report for Amazon (on top of the bad news from Meta and Google) that absolutely has broad meaning for the economy headed in the wrong direction. That Amazon report had stocks properly heading lower at the open only to dramatically reverse course end the session with a rip roaring rally at +2.46%.

That type of reversal is very common for the last gas of a rally before heading in the other direction. Meaning that the buying pressure may be exhausted and hard to get above resistance at the 100 day moving average (3,903).

Second, and more importantly, next week brings the most vital economic reports for November starting with ISM Manufacturing on Tuesday. This is followed on Wednesday by the Fed rate decision with another hike on the way. Coming down the home stretch we have ISM Services on Thursday and then Government Employment on Friday.

Please remember that the Flash PMI report from Monday already confirmed weakening conditions for both manufacturing and services. (49.9 and 47.3 respectively…both under 50 meaning contraction). This bodes poorly for the more widely followed, and market moving, ISM versions of this report.

Along with that we are still likely in a world of where most everything that happens next week is negative for stocks. Even positive economic news would be a signal that more inflation is in our future which points to more aggressive Fed. Thus, I expect the recent bear market rally to fizzle out with investors getting back in a selling mood.

From previous commentaries I have shared the view that the likely bottom of this bear is somewhere around 3,000. And if things fall into their typical bear market pattern that is happening in the first half of 2023 just as the economy is likely finding the depths of the recession.

Yes, it is possible that stocks could keep moving higher a bit longer not unlike the illogical mid-summer rally before new bear market lows were established.

Bear market rallies are called “suckers rallies” for a reason.

So the word to the wise is…don’t be a sucker.

Expect this rally to fizzle out, as early as this week. But probably no higher than the 200 day moving average at 4,100 that capped the last rally.

Invest accordingly.

What To Do Next?

Discover my special portfolio with 9 simple trades to help you generate gains as the market descends further into bear market territory.

This plan has been working wonders since it went into place mid August generating a robust gain for investors as the S&P 500 (SPY) tanked.

And now is great time to load back up as we make even lower lows in the weeks and months ahead.

If you have been successful navigating the investment waters in 2022, then please feel free to ignore.

However, if the bearish argument shared above does make you curious as to what happens next…then do consider getting my updated “Bear Market Game Plan” that includes specifics on the 9 unique positions in my timely and profitable portfolio.

Click Here to Learn More >

Wishing you a world of investment success!


Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, Stock News Network and Editor, Reitmeister Total Return

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


SPY shares . Year-to-date, SPY has declined -17.15%, 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...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Where Do Stocks Go from Here?

The S&P 500 (SPY) has already made new highs just above 6,000. However, that seems to be a point of stiff resistance. This begs the question of what happens next? And what should an investor do to stay on the right side of the action? Read on below for Steve Reitmeister’s time answers and top 10 stocks.

3 Streaming Stocks Benefiting from Cord-Cutting Trends

As streaming continues to dominate the digital entertainment landscape, the global streaming market presents a lucrative investment opportunity. So, it could be ideal to invest in fundamentally solid streaming stocks Netflix (NFLX), Walt Disney (DIS), and Roku (ROKU). Read further...

3 Gold Stocks to Buy as Safe-Haven Demand Grows

Gold is a stable investment now due to its role as a safe-haven asset during economic uncertainty, rising demand, industrial use, and growth, bolstered by central bank purchases and interest rate cuts. Therefore, investors should consider investing in top gold stocks such as Newmont (NEM), Barrick Gold (GOLD), and Agnico Eagle Mines (AEM). Read more...

3 AI Stocks Transforming Industries and Driving Future Growth

With rapid digitalization, rapid adoption, and development, as well as surging demand, the AI market is on the rise. Amid this backdrop, investors could buy fundamentally solid AI stocks NVIDIA Corporation (NVDA), Microsoft (MSFT), and Meta Platforms (META) poised for substantial gains. Continue reading...

What Happens After 6,000 for Stocks?

The S&P 500 (SPY) has the petal to the medal after the election and 2nd Fed rate cut. However, stocks are now pressed up against serious resistance at 6,000 which begs the question of what happens next? Investment pro Steve Reitmeister shares his timely market views including a preview of his top 10 stocks. Get the full story below...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News