The 2023 advance by U.S. equities has been pretty narrow, with the “Magnificent 7” group of stocks leading the way.
Just look at how Apple keeps growing larger than the entire Russell 2000.
This is unusual, and it’s worth noting that periods like this have often marked extremes in investor behavior that eventually get corrected.
But for now, growth stocks have gotten some relief from falling interest rates.
The yield on the 10-year Treasury has fallen from 4.36% to 4.09%.
This doesn’t mean that stock investors should stop worrying about rising interest rates, but it’s definitely a positive sign.
August was a rough month for most asset classes except junk bonds, but the market is starting to look more constructive for September.
Maybe it’s the falling interest rates, but demand for stocks is increasing.
Check out this indicator that uses bullish percent information for various indices.
Yesterday, this indicator for the Nasdaq 100 gave us a buy signal.
This tool provides an unemotional, data-driven “opinion” on the market, and it’s now saying that institutions are putting money back into the market.
There’s some other evidence we’ve seen to support this view, too.
For example, the percentage of stocks above their 50-day moving average is increasing. Levels under 50% usually coincide with a weak market, but levels of 30% or less have often coincided with tradeable bottoms.
We just saw this indicator bounce right off of the 30% level.
Finally, the semiconductor stocks are often referred to as the “technology barometer.” And there’s positive news here as well.
The bullish percentage for the semiconductor industry has just reversed, telling us that demand for these stocks is increasing.
This is also bullish.
So, for now, conditions are looking good for a better performance looking ahead.
The market is giving investors some reasons to be bullish for September.
But it’s always important to remember that the market can change quickly, so investors should be prepared for anything.
If you’d like to talk more about positioning yourself to be ready for whatever comes next in the changing markets, you can schedule an appointment today with one of our experienced advisors who will guide you through our various adaptive investment models.
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