Are Stocks About to EXPLODE Higher?

As most of you know, my market outlook was pretty muted the last few months. That was exactly the right call given a rolling correction with excess volatility. Gladly our Zen Investor portfolio continued to grind higher against this rough backdrop. 

Yet know the spring might be loaded for the next bull run higher. So, let’s discuss why that might be the case plus my investment plan to outperform.

Market Commentary

Why do I believe that stocks are set for a rally after several months of trending sideways to slightly down?

Short answer is this equation:

Mid Terms Over + Santa Claus Rally + Lower Treasury Rates + 4 Month Consolidation = Upside Into Year End

The longer and more complete answer was spelled out in my 11/2 LIVE webinar. Watch replay here >

There is a lot to unpack in that equation for the market to go higher...so indeed watch the webinar replay if you have not already.

However, as shared MANY times over in recent days, the most concerning thing for stocks was the relationship between the earnings yield for stocks and the 10 year Treasury Yield. Let’s see the most recent picture which gladly is modestly improving:

As you can see the blue line for the Treasury Yield rarely goes above the red line for the stock markets Earnings Yield. So with them being neck and neck the past several months helps explain why stocks have been in a trading range for quite a while.

But given just enough of a sell off in some overpriced stocks, plus the 10 year yield pushing back from a recent high of 5.3% to 4.9% has made investing in stocks a bit more attractive. I think those hounds get unleashed once the mid term elections are in the rear view mirror.

As for Iran, energy, inflation etc...that is still part of the equation. But let’s imagine that it extends to March 2027 and beyond.

That would be a full year with elevated energy prices which technically speaking would bring inflation rate down on a year over year basis from the current uncomfortable 3-4%....which then also eases demands on the Fed to raise rates. This too is somewhat bullish.

But yes, the much better solution for all is an end to the war with Iran leading to long term lowering of energy prices and inflation concerns. And yes, it should also help lower the 10 year treasury rate even further making stocks look like the more attractive investment choice.

If indeed a near term bull run is in hand, then a more Risk On mix of stocks will outperform. That mix includes:

Small Caps > Large Caps

Aggressive Industries > Defensive Industries

Healthy Growth...But with an eye towards value (not just speculative growth or growth at any price)

AI trade may not participate as much as many hope (more on that in the portfolio section below).

Gladly the Zen Ratings will be very beneficial in tracking down the best stocks that match these criteria. And we have quite a few that fit the bill in the Zen Investor portfolio.

What To Do Next?

Discover my Zen Investor portfolio that combines the outperformance found in the Zen Ratings quant model with my greater than 40 years of investing experience. 

This leads to a portfolio of my top 20 stocks. And that portfolio is beating the STUFFING out of the market. I mean that our members are beating the market by about 4 to 1. 

Yes, I know that sounds like some used car sales pitch. So go ahead and check out my daily performance tracking here. 

When you want to see those top 20 stocks

…and learn more about my unique investment process

…get the 2 hot stock I just added this week

…then click the link below. 

Discover the Zen Investor & Top 20 Stocks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

Want to get in touch? Email us at news@wallstreetzen.com.