May 2024 Watchlist: Entry Points

Market Overview

Welcome back to The Wealth Catchers' watchlist. The month of April was drenched in red for investors. We saw the market march downward across all indices after being on an extended run over the past few months. We saw some names continue to fall out of favor, such as Tesla, while others still managed to climb, such as Eli Lily, despite the negative market sentiment. The market provided plenty of buying opportunities for some great names, such as Meta, Eli Lily (before earnings), and even the semiconductor sector (SMH) was trading at an attractive price. The fall this month may have seemed drastic and overwhelming for some, but keep in mind that this is a small blip on the chart. Zoom out and see where we are at in regards to all-time highs. While some stocks and sectors may have fallen into correction territory, the market as a whole has not. Stay invested and remain diligent.

Fed & Monetary Policy

Now, when it comes to these interest rates, it's becoming more and more likely that we will maybe see one cut this year. The labor market is still strong, unemployment isn't ticking up, and inflation still remains sticky. The FedWatch Tool shows there's a 48.8% probability that the Fed will cut rates in September. If it doesn't happen then, it's safe to say that it won't happen this year. This news seems to still be a bit tough for the market to digest because, in my opinion, it puts a bigger magnifying glass on the Fed and the economy. We will see the media focus more on the jobs reports, PCI and PCE, the ISM report, and whatever report they can get their hands on that can help paint the picture of what the Fed will do next. As I stated in the March 2024 Watchlist, " ...my belief is that the forward guidance and actions of the market are pricing in and EXPECTING a lower rate environment.". My thesis still remains the same, which is why I believe we saw some of this selling off. The rate cut story is changing and some investors are taking some money off the table. Higher for longer isn't really what investors want to hear. The push to the upside was fueled by the idea that rate cuts will happen for sure this year. Now that there is uncertainty around that, we are starting to see some volatility in the market. Remember, the market doesn't like uncertainty

Monthly Performance

At the close of the month, here are how the indices performed:Dow Jones (-4.43%)S&P 500 (-3.97%)NASDAQ (-4.51%)Russell 2000 (-6.13%)At the close of the month, the VIX was at 15.65. At the close of the month, the "Fear and Greed" index was at 40, indicating fear in the market.

Closing Note

I appreciate you checking in, and here's your friendly reminder:

“The time to buy is when there's blood in the streets.”

Keep on buying assets; there's always a bull or bear market somewhere. Keep your money working.