Chronicle Journal: Finance

Break Out! Bulls Ready to Run Higher

The S&P 500 (SPY) was compressed under 4,000 from mid-February til early April when the stars aligned for a break out to new highs. Very strong economic news was the catalyst for this move. Get the rest of the story plus details on my top 11 stocks and 3 ETFs for today’s market. Read on for more.

(Please enjoy this updated version of my weekly commentary from the Reitmeister Total Return newsletter).

Tuesday proved to be the 3rd straight close above 4,000. Often investors want to see 2-3 closes above a previous resistance level before saying that the breakout out is confirmed.

Given the 7 weeks spent consolidating under 4,000 gives us good reason to believe that the energy has been built to burst above. On top of that we have a slate of terrific economic reports that are likely acting as a catalyst to get investors back to their old bullish ways.

Let’s discuss all this and more in this week’s commentary.

Market Commentary

We enjoyed a big turnout for Monday’s Members Only webinar. There we covered topics like:

  • March Rewind
  • 4,000 Break Out or Fake Out?
  • Trading Plan
  • Portfolio Position Review
  • Q&A

Did you miss it? Then click below to...

Watch Webinar Now>>

Now back to the market commentary...

Given the amount of time going over the market outlook and our trading plan in yesterday’s webinar, then this will be a shorter than average commentary today. Meaning I will skip over that discussion now and dig into the very juicy economic indicators that are spiking higher of late. And yes, the strength of these reports is most likely the catalyst that finally got the market to break above 4,000 at this time.

Let’s wind back the clock to last Wednesday. There we got to 2 economic reports that are not as widely followed, but definitely are leading indicators of where their more widely followed cousin reports end up.

First, I am referring to ADP Employment which leapt from 176K jobs added in February all the way up to 517K jobs added in March. That indeed was strong foreshadowing of what awaited investors on Good Friday when then Government Employment Situation report was released.

There we saw an even more impressive picture of job growth with 916K jobs added, which was nearly 40% above the expected level. Along with that the unemployment rate dropped another couple notches to 6.0%. That is a far cry better than the 14% unemployment rate experienced a year ago at the darkest hour of the Coronavirus.

Back to the leading indicator reports from last Wednesday. There we also got served up a delicious 66.3 for Chicago PMI versus the 59.8 that was expected. This is the most widely followed of the regional manufacturing reports as it often tips off what will be found in the national ISM Manufacturing report that follows.

Indeed that was the case as the very next day, ISM Manufacturing leapt from an already impressive 60.8 up to 64.7. This was no April Fools joke because the gains in the report were broad based in the key internal components. Most important of which was the 59.6 showing for the Employment indicator.

Next up was a “off the charts” 68.0 for the forward looking New Orders component. Truly I have never seen a better showing for ISM Manufacturing then what got served up last week. And that is before any positives that would likely come in from any forthcoming infrastructure stimulus package.

If all that wasn’t good enough, then we got ISM Services on Monday moving up from 55.3 to 63.7. And yes, just like Manufacturing, we saw gains in both New Orders (67.2) and Employment (57.2). No doubt recent stimulus checks in the hands of consumers bolstered these results.

Back to the big picture. The #1 reason that the market is bullish is that interest rates are so low that stocks are the better value by 150%. That is why the bull market rallies on even when the PE seems so elevated. (if you want more insight on this, then check out January 2021 members only webinar where we discussed proof that this is a stock market bubble. And more importantly our trading plan in that environment to ride it up and then parachute out at the top. Watch that here).

And the #2 reason for bull market is the serious improvements in the economic picture as we emerge from our homes as the Coronavirus begins to wane as the focal point of our daily lives. The most recent of those economic reports, shared above, is AMPLE proof to feed bulls for the next run higher.

So putting it altogether we understand why the market is bullish. And why we finally broke above 4,000. And why our portfolio is padding on more profits by the day. More on that below...

Portfolio Update

Did you watch the webinar to get insights on all 11 stocks and 3 ETFs in the portfolio? Then watch now starting 24 minutes into the webinar to focus on the Portfolio Position Review. Watch Now >>

This week has started off on a profitable foot and further added to our gains on the year. Now we stand at +24.27% year to date in early 2021 which is a very healthy advantage over the S&P at +8.46%.

Now let’s give some additional updates on the positions inside our portfolio:

(the rest of the commentary on the individual stocks and ETFs in the portfolio is reserved for Reitmeister Total Return members).

What To Do Next?

Right now my Reitmeister Total Return portfolio is well positioned for where the market’s headed in 2021. And that is a VERY different playbook than what worked in 2020.

Gladly we have been reading the tea leaves well which is why our portfolio is solidly ahead to start the new year.

If you would like to see the current portfolio of 11 stocks and 3 ETFs, and be alerted to our next timely trades, then consider starting a 30 day trial by clicking the link below.

About Reitmeister Total Return newsletter & 30 Day Trial

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

SPY shares fell $0.39 (-0.10%) in premarket trading Wednesday. Year-to-date, SPY has gained 8.98%, 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.


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