The Institute for Supply Management (ISM) released its Purchasing Managers’ Index yesterday. The survey asks purchasing managers and buyers about inventory, prices, supplies, expectations for future orders, hiring patterns, etc.
The ISM considers a PMI reading of 50 or more a good sign for the economy. A reading better than 50 or 50% tells us an equal or higher number of manufacturers and buyers report better business than those who say it’s worse than the previous month. Expansion in manufacturing, which comprises 11.9% of the economy, is favorable, though this month’s reading dropped to 50.9 from 52.8 in August, its lowest reading since May 2020.
It’s still in expansion territory – barely – and missed economists’ estimated 52.2 mark. Yet somehow Monday, the market rallied. It’s hard not to overanalyze why this phenomenon is happening; however, it’s just one report and one day of rallies.
In Monday’s livestream, we explore the prospect of entering a period when bad news pushes stocks higher rather than lower. We have seen periods like this before, and it can be tricky to trade. It’s time to be guarded about our investments while keeping an eye on the sectors that are doing well, like consumer stocks.
Keeping a Neutral Outlook
We’re expecting two more interesting reports this week – the ADP National Employment Report and the Bureau of Labor Statistics’ jobs report on Friday. Again, we expect them to be favorable – positive wages and jobs have buoyed the economy and kept recession fears in check. We’ll keep you updated on the livestream. If you haven’t already subscribed, you can do so here.
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You may have noticed that our outlook during this period of volatility is not binary – we don’t view the markets as being completely bullish or completely bearish. We’re weighing the negative reports and the favorable ones to help traders make the most optimal decisions for their portfolios. In these scenarios, we like to deploy plans with a positive outlook, while hedging as much risk as possible.
We all need a little help tailoring our portfolios in these uncertain times. Every smart investor’s goal should be the construction and ownership of portfolio that can make you money during the good times… and keep you safe during the bad times. Investor Place CEO Brian Hunt put together two reports to add to our arsenal that can help guard – and grow – your wealth.
- Check out his report, How to Build a Crisis-Proof, Inflation Proof Portfolio, where Brian outlines how to structure your portfolio for success, whether the market is up, down, or sideways.
- Recessions, bear markets, and stock market corrections make a lot of panic-worthy headlines. In another free report, What to Do When the Stock Market Drops, Brian shares why during stock market corrections it’s important to focus on what really matters: progress, transformational industry trends, creating value for others, and innovation.
Yes, that can be easier said than done. But as Brian shows us, in the long term, it can pay off – big time.
Viewer Questions and Feedback
Viewers this week seem more concerned with the entire economic picture as it relates to the market, so we addressed those big-picture questions instead of focusing on the usual esoteric stock and sector questions.
- I saw a report that logistics managers have seen a 20% drop in ocean freight orders for the months of September and October across many products. That doesn’t sound promising – can you reassure us? – Geraldine D.
- Can you explain how you researched the 50 years of recessions in relation to the market in your last livestream? – Jung A.
- Can you go into more detail about retail sentiment and stocks to watch? – Jolene S.
- Are we in a “technical recession” because we’ve had two negative quarters of GDP growth? – Ramen P.
We’d be happy to answer any of your questions, too. Just drop us a line in the comments section of our livestreams or email us at feedback@investorplace.com.
Sincerely,
John Jagerson & Wade Hansen
Editors, Trading Opportunities
P.S. WARNING: Massive Bear Market “Divergence Event” Ahead
Divergence came for investors during the peak of the 2008 financial crisis, the Dot-Com crash, and Black Monday in 1987. Today, Luke Lango – a self-made millionaire and investing prodigy – says this event is just ahead in 2022. If you’re holding onto cash, you’re in for a rude awakening. Get the facts here.
