Entering September, the stock market’s upward trajectory, kickstarted in early 2023, stands unwavering despite encountering periodic setbacks. Recall last month’s discussion on the recent correction, swiftly rebounding as the S&P 500 showcases a resilient recovery.
Examining the S&P 500 chart, the recent market dynamics unfold vividly, with the index surging past multiple resistance thresholds and key moving averages. This robust advancement hints at the conclusion of the correction phase, paving the way for an upward trajectory, though the S&P 500 currently perches at a pivotal resistance juncture—its prior peak.
Beyond the S&P 500 realm, various technical indicators echo bullish fervor. Scroll down the charts unraveling these cues. Notably, the Invesco S&P 500 Equal Weight ETF (NYSE:) has surged past its pre-correction pinnacle, indicating profound market strength. Additionally, witness a healthy shift away from tech stocks towards sectors such as industrials, real estate, financials, utilities, and healthcare. This sectoral rotation signifies a flourishing uptrend.
But, keep a watchful eye on the , struggling to keep pace. Unlike the S&P 500, it lags beneath its prior zenith, failing to breach the correction downtrend line. While not an immediate red flag, the tech sector’s performance, given its massive S&P 500 weightage, warrants vigilant monitoring in the weeks ahead.
Equal Weighted S&P 500: Breaking Through Resistance
The Equal Weighted S&P 500 chart unveils a pivotal breakthrough: surging above the pre-correction peak, shattering a critical resistance barrier. This triumph instills confidence in the bullish narrative, hinting at a diverse stock market rally, beyond the S&P 500 giants.
This breakout fuels optimism, suggesting a broad-based market surge, backed by a spectrum of stocks rather than a handful of heavyweights. This broad participation underlines a sustained uptrend continuation.
Sector Rotation: A Sign of Market Health
The S&P 500’s precarious perch at a pivotal resistance level contrasts with the robust sectoral vigor noted below. Industrials, real estate, financials, utilities, and healthcare have vaulted past their respective pre-correction peaks, solidifying the bullish sector shift highlighted earlier. This widespread sectoral vigor bolsters the bullish outlook, emphasizing across-the-board market participation in the uptrend, reinforcing projections of continued growth.
Nasdaq 100: Lagging Behind
The lens turns to the Nasdaq 100 ETF (QQQ), painting a divergent picture against the S&P 500 and other sectors. Failing to surge above the downtrend line, the Nasdaq 100 trails far beneath its pre-correction apogee. Hovering at the 50-day moving average, it marks a critical juncture worth close monitoring.
This underperformance spotlights a concerning area. While the broader market showcases strength through sector rotation and holistic gains, Nasdaq 100’s sluggishness hints at the tech sector, a major S&P 500 component, yet to join the resurgence fully. This discrepancy poses a critical watchpoint, as persistent tech sector frailty may impede broader market progression.
Conclusion
To conclude, the stock market’s upward momentum endures, with the S&P 500 swiftly rebounding from the recent correction and currently testing significant resistance levels. The Equal Weighted S&P 500 breaching its pre-correction zenith and the wide-ranging sectoral rotation into value stocks bolster the bullish view. Nonetheless, Nasdaq 100’s underperformance, lingering below downtrend lines and pivotal resistance points, beckons attentive scrutiny.
Current Portfolio Allocation
In the previous newsletter, equity allocations in client accounts saw reductions owing to prevailing market frailties. But, as market resilience emerged, significant adjustments transpired.
Client accounts now stand nearly fully invested. Equity positions were aggressively ramped up with the market’s upward turn, seizing on the renewed bullish momentum. This strategic stance mirrors confidence in the prevailing market milieu.