Image Source: Pixabay

In this weekly outlook, I examine the asset classes, sectors, equity groups, and ETFs that led the market higher, and which market segments bucked the trend by moving lower.

By keeping an eye on the leaders and laggards, we can get a sense of where the big money is going and where it's coming from. Signs that market participation is broadening out are continuing to show up in the data. As this trend continues, the durability of the rally will continue to improve.

The S&P 500 Pullback Continues

After making a new 2023 high on July 31, the market is now in the process of consolidating its gains and expanding its participation. For the week, the S&P 500 was up 0.8%.

A Look at Monthly Returns

This chart shows the monthly returns for the past year. The August pullback has erased all of the July gains. It looks like we're getting the 5%-7% decline I have been expecting. 

Image Source: ZenInvestor

The Bull Market Dips Below the Trend Line

The following chart highlights the 23.1% gain in the S&P 500 from the October 2022 low through Friday's close. The index is now 8.1% below its record high close seen on Jan. 3, 2022.

The Golden Cross

The market entered a Golden Cross configuration (a Golden Cross occurs when the 50-day moving average crosses above the 200-day moving average) on Feb. 2, 2023. 

The spread between these two moving averages is widening. Today, it stands at 7.7%, more than three times as wide as the long-term average of 2.3%. This wide spread is one of the reasons I'm expecting a pullback of 5%-7% for the S&P 500. 

Image Source: ZenInvestor

Major Asset Class Performance

Here is a look at the performance of the major asset classes, sorted by last week's returns. I also included the year-to-date returns and the returns seen since the Oct. 12, 2022 low for additional context.

The best performer last week was the precious metals asset class, as investors looked for ways to protect their gains from further downside in the market. The worst performing asset class last week was volatility. Meanwhile, blockchain companies lost more ground due to continued weakness in the crypto space.

Image Source: ZenInvestor

Equity Sector Performance

For this report, I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us added granularity as we survey the winners and losers.

Technology stocks led the way higher last week, after NVIDIA blew the doors off of analyst earnings estimates. The company also raised guidance for the next few quarters. Retail was the hardest-hit, losing -4.37% for the week. The financial media blamed the poor showing on weaker-than-expected back to school spending.

Image Source: ZenInvestor

Equity Group Performance

For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.

The S&P top 7 stocks by market cap led the way higher, inspired by big moves by NVIDIA (NVDA) and Tesla (TSLA). The worst performing group for the week was small-cap value, which lost -0.96%.

Image Source: ZenInvestor

The S&P Top 7

Here is a closer look at the mega-cap stocks that have been leading the market all year. NVIDIA was up 6.3% for the week. Tesla was the biggest winner, up 10.7%. 

Image Source: ZenInvestor

The 10 Best Performing ETFs from Last Week

Silver, gold, and uranium ETFs were big winners last week. Cybersecurity also performed well.

Image Source: ZenInvestor

The 10 Worst Performing ETFs from Last Week

Cannabis had another tough week, down -5.2%. The ETFMG Alternative Harvest ETF (MJ) is down -32.2% year-to-date. Retail stocks also experienced a tough week.

Image Source: ZenInvestor

The 10 Best Performing Stocks from Last Week

Here are the 10 best performing stocks in the S&P 1500 last week. Fabrinet (FN), an electronics company, was up 38.3% last week. The company posted sales and earnings that came in better than Wall Street had anticipated.

Image Source: ZenInvestor

The 10 Worst Performing Stocks from Last Week

Here are the 10 worst performing stocks in the S&P 1500 last week. Both Sempra Energy (SRE) and Copart (CPRT) split 2-for-1 last week, making it look like the stocks were cut in half. The shares of both companies actually made small gains for the week.

Foot Locker (FL), Peloton (PTON) and Dick's Sporting Goods (DKS), however, all crumbled after they announced earnings, dragging footwear and fitness stocks lower.

Image Source: ZenInvestor

Final Thoughts

The S&P 500 was up 0.8% last week, but the near-term trend is still lower. This gain can be attributed to the strong showing by the top 7 market leaders, which were up by 3.45% on average. This masks a weaker market. On an equal weighted basis, the market was down by -0.2% for the week.

This tells me that the current pullback is not over yet. We have given back 4% of the market's gains since the recent peak on July 31. I'm sticking with my 5%-7% decline for now.  

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