Just minutes before 2pm ET today stocks were making another run at 3,100. Next thing you know the CNBC headline says “China Trade Snag.” Within a minute stocks are plummeting lower. And just as surprising, stocks do a turnabout and head to a positive finish and new record close at 3,094.

So did we hit a snag or not?

We will cover that intriguing topic and more in this week’s Reitmeister Total Return commentary.

Market Commentary

It was kind of a sleepy week until the final two hours before today’s close. As shared in the intro, CNBC and other news services started to report that the US and China have hit a “snag” in the trade negotiation.

The problem is that the US is trying to lock in more concessions to help regulate intellectual property (Ex. the Huawei situation). And China doesn’t want to be locked in to a specific amount of agricultural purchases. Add the two together and you have a snag.

The initial drop that ensued was to be expected. But then within 30 minutes stocks reversed course and headed towards a record finish. That part doesn’t make that much sense given the news flow. Meaning I see nothing that says the report was in error.

Perhaps most investors believe this is just part of the “sausage making process” of making a deal. And that we have seen other short term snags quickly blow away and the negotiations get back on track.

Maybe true this time…Maybe it becomes a bigger deal and stocks pull back further, faster. For now we will just continue to monitor the trade news flow and adjust accordingly.

At this stage earnings season is pretty well over. Most investment outlets have applauded stocks for topping low expectations. But putting China trade aside, you have to be wearing rose colored glasses to applaud -2.4% year over year growth. But that is the world we are living in now that the only thing that matters is China trade.

Again, not that it matters…but the Economics major in me would like to point out that Q4 GDP estimates from the Atlanta Feds famed GDP Now model is only +1.0%. Yes, it is early, but no doubt the anemic manufacturing #s are pulling down hard on this reading.

Gladly the Blue Chip economist panel is a notch higher at +1.8%. We will continue to monitor as the quarter goes on because at some point…the fundamentals beyond China trade will matter to the market (as it did the other 99.9% of time).

In the next section I talk a bit more about the price action of late. And that we are likely entering a consolidation period around 3,100 barring some change in the China trade talks. So let’s pick up the story there…

Portfolio Update

First, I want to make sure you saw the 3 trades this morning:

• Sell just 2.5% allocation in …
• Buy 1.5% additional allocation in…
• Buy 7.5% allocation in …

End of Free Preview

The rest of the commentary is reserved for subscribers to the Reitmeister Total Return portfolio.

That is where I specifics on the 3 trades shared above. The first move was to clip some profits from an existing position. Then add 1.5% allocation to one of our stocks that saw a 6% intraday bounce after we got on board shares.

Most exciting is buying a new 7.5% allocation in one of the most innovative retail concepts right after a glorious earnings report. They only have 300 locations in just a few states. But given the 5.8% same store sales growth, they will be on course for major nationwide expansion. Truly feels like buying into TJ Maxx 20+ years ago.

Beyond these 3 trades, we also cover updates on the other 9 stocks and 3 ETFs inside the Reitmeister Total Return portfolio.

To see the full portfolio, the next trades, and read the rest of this commentary, just start a 30 day trial. Click the link below to learn more.

About the Reitmeister Total Return portfolio & 30 Day Trial

SPY shares were trading at $308.49 per share on Thursday morning, down $0.61 (-0.20%). Year-to-date, SPY has gained 25.16%, versus a 25.16% 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...

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