It’s not about Nvidia… it’s about the broader market

August 25, 2023  |  Michael Reilly

Every headline and every tweet this week has been about one stock – Nvidia (NVDA) and their blowout numbers.

Do your P&L a favor, don’t get caught up in the hype.

Yeah, sure, give NVDA a standing ovation if you must – but remember, Nvidia is one stock in one sector, albeit, an important one.

As I see it, NVDA is acting like a smoke screen for what is going on in the broader market of stocks.

And investors would be wise to look at the broader picture.

I can sum up the broader market with just one word – “STUCK.”

And we’re going to stay that way until stocks can prove themselves.

The only way they can do that is by breaking above an overwhelming amount of overhead supply.

Stay with me here. I’ll show you what I mean in just a moment.

But first, I want to remind you once again, that the second half of 2023 looks much different than the first half.

So if you think buying growth stocks or their indexes – the S&P 500 or the NASDAQ – is going to continue to reward you the same way they did in the first half of 2023, well, you might just find yourself frustrated.

Here’s the S&P 500 index. Unable to break out. In other words, STUCK, below those early 2022 highs.

That’s not what stocks did for the first six months of the year. Things are different now.

Here are four of arguably the most important groups of stocks all stuck below their prior cycle’s peaks:

Semiconductors (in spite of NVDA), Home Builders, Industrials and Technology – all stuck below overhead resistance.

As long as these sectors remain below their prior cycle highs, it’s hard for me to believe the indexes can move significantly higher.

And as frustrating as that may be for some investors, the fact is, what we’re seeing is quite normal.

We are in what is the seasonally weak period for stocks – August and September.

So there is nothing happening that isn’t actually very normal.

This market calls for patience.

I’ll start to worry more if stocks don’t start their normal seasonal migration higher in the fall.

Until then, understand the kind of market you’re in and invest accordingly.

If you’d like to talk more about how to position yourself to be ready for 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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