Market Trend: The S&P 500 (SPY Stock) continues its downward trend.
Looking at the SPY for the year and we see that the market continues to make lower lows and lower highs.
SPY stock took a big hit on Wednesday during JPOW’s speech, dropping from $405 to as low as $396.
The index closed at $399.40 but continues to be on a downward trend.
Zooming out to the full year and we see the SPY started off in January at $477 per share.
By the end of the first quarter, we see a high of $461 per share and a low of $417 per share.
In June, we see a low of $365 and a peak of $426 by the third quarter of 2022, in August.
This fourth quarter, SPY stock had a low of $348 in October, and a high of $414 in December.
SPY Downtrend Chart – Franknez.com.
Will The Stock Market Go Up Soon?
Will the stock market go up soon? Will stocks go up?
Based on the current trend we’re seeing from the S&P 500, it doesn’t seem like the market is ready for a bull run anytime soon.
Buyers failed to break the downward trend as seen in the figure above which means the probability of sellers coming in again is high.
In terms of the economy, inflation is still high at 7.11% and mass layoffs have been seen with DoorDash, Amazon, Facebook (META), Twitter, Netflix, Carvana, and many other companies.
Although JPOW said the U.S economy is currently not in a recession, both Bank of America and Wells Fargo CEOs expect a recession to hit the country during the first quarter of 2023 with some sort of light at the end of the tunnel by Q4.
“While retail payments surged 11% so far this year to nearly $4 trillion, that increase obscures a slowdown that began in recent weeks: November spending rose just 5%,” Bank of America’s CEO Brian Moynihan said.
Wells Fargo CEO Charlie Scharf said, “there is a slowdown happening, there is no question about it. We are expecting a fairly weak economy throughout the entire year (2023).”
If this happens to be the case, today’s bear market may drag out through the majority of the new year.
Leave Your Thoughts Below
Do you see this downtrend in the stock market continuing throughout 2023?
I stated in a recent video that because we have seen mainly bear rallies all year long, it’s possible the SPY breaks downwards below $400 per share and we continue to see this downtrend.
Well, that happened last week, and we were officially, but momentarily, in a bear market.
Today we saw a small bounce back staying clear from that title.
But it’s still unclear whether the market has bottomed out yet or if there’s still room for stocks to fall.
Have the markets cooled off?
Is the market ready for a reversal?
What do you think?
Leave your thoughts in the comment section of the blog below.
You might know Warren Buffett for being one of the most successful stock pickers of our time.
If you follow him you’re quite aware of how much he encourages new retail investors to invest in a growth driven index fund like the S&P 500, or SPY stock (VOO).
The Oracle of Omaha even said he’s instructed the trustee in charge of his estate to invest 90% of his money into the S&P 500 for his wife after he dies, Buffett told CNBC’s Becky Quick in an exclusive interview on “Squawk Box”.
WOW! That says a lot about SPY stock coming from Warren Buffett himself.
If you think about it, it took Warren so many years of trial and error to figure out his best bet was to simply invest in a long-term growth index fund.
This leads me to believe that anything else in the market could very well be played short term to add to this long term retirement vehicle.
For instance, I’m heavily invested in the momentum stock, AMC.
I’ve made a tremendous amount of gains (on paper) but don’t plan on cashing out until it squeezes.
You can bet I’m parking a ton of cash in SPY stock.
A company provides dividends, or a ‘payout’ to its shareholders for holding the stock.
It’s a little lower now than it has been before (3-5% dividend yield) but this fluctuates.
Dividends are not the same as ROI or annual returns.
Investors love dividends because it allows us to either cash in this payout, or reinvest it back into the stock.
When you reinvest your dividends back into SPY stock, you begin accumulating fractions of the share which eventually leads to the stock buying another share on its own.
Put enough cash in SPY stock and this snowball can grow quite large over the years.
I’ve been personally investing in momentum stocks this entire year so I haven’t updated my SPY stock position just yet.
Let me know if you own SPY stock in the comment section of the blog below. I’d love to know.
#3. Annual Return of 13.55% In Recent Years
SPY stock has had an amazing return of 13.55% over the past 3 years. Since inception, the S&P 500 has yielded an annual return of approximately 10%.
If you make $5 million dollars from momentum trading, pay your taxes, and put at least $1 million in SPY stock then you could be earning a whopping $100k yearly return.
If you put $2 million and leave yourself with the remaining in your pocket, well then now you’re earning $200k per year and have a cool $1.3 million in your pocket.
This is just an example of how new retail investors can use SPY stock as a long term retirement vehicle that will continue to multiply your profits.
Using this same example, I would personally leave $3 million in SPY stock and leave the $300k in my pocket.
Some of this money could go into other stocks or crypto, or even other momentum trades.
