The One-Minute Market Report - Saturday, Aug. 5

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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 Rally Takes a Rest

After making a new 2023 high on Monday, the market sold off for the next four days. For the week, the S&P 500 was down 2.3%.

s&p daily prices 8-4-23

A Look at Monthly Returns

This chart shows the monthly returns for the past year. After gaining 3.1% in July, the month of August is starting out in negative territory. The Fitch downgrade of US Treasury bonds set a negative tone for the market. 

s&p monthly returns 8-4-23

The Bull Market Continues

This chart highlights the 25.2% gain in the S&P 500 from the October 2022 low through Friday's close. The index is now just 6.6% below its record high close on Jan. 3, 2022.

bull run 8-4-23

The Golden Cross

The market entered a Death Cross configuration (a Death Cross occurs when the 50-day moving average crosses below the 200-day moving average) on March 14, 2022. The Death Cross ended on Feb. 2, 2023. We are now in a Golden Cross configuration, with the 50-day moving average above the 200-day moving average.

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. 

s&p golden cross 8-4-23

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 as well as the returns since the Oct. 12, 2022 low for additional context.

The best performer last week was volatility, as investors were concerned by the Fitch downgrade. The worst performing asset class last week was Blockchain, which gave up 5.3%. This asset class is still leading the pack on a year-to-date basis, up 60.5%.

asset class returns 8-4-23

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.

Energy stocks led the way higher last week, thanks to a rebound in crude oil and natural gas prices. This was the only sector to post a gain for the week. Utilities and autos were the hardest-hit, losing more than 4% each for the week.

s&p sector returns 8-4-23

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 have become more volatile lately. Over the past three weeks, they have swung from last place to first place, and now they have swung to last place once again.

Small-caps and mid-caps continue to outperform large-caps, as participation in the rally broadens out.  Foreign stocks underperformed their US counterparts as the Eurozone enters recession territory. 

equity groups 8-4-23

The S&P Top 7

Here is a look at the seven mega-cap stocks that have been leading the market all year. Apple gave back 7.1% as iPhone sales underwhelmed the Street. Amazon was the only winner, as they blew the doors off of analyst earnings estimates. The company has been cutting costs by reducing headcount over the past year.

s&p top 7 8-4-23

The 10 Best Performing ETFs from Last Week

The ETF leader board was dominated by physical commodity producers last week. Uranium, oil, natural gas, and palladium all experienced a good week. 

best etfs 8-4-23

The 10 Worst Performing ETFs from Last Week

Last week's losers were dominated by technology-based ETFs.  

worst etfs 8-4-23

The 10 Best Performing Stocks from Last Week

Here are the 10 best performing stocks in the S&P 1500 from last week. Tupperware is up 350% over the past three weeks. Telephone & Data jumped 85% last week on news that they are exploring a possible sale or spin-off of the 80% owned US Cellular.

best stocks 8-4-23

The 10 Worst Performing Stocks from Last Week

Here are the 10 worst performing stocks in the S&P 1500 from last week. According to a Barron's story, "DXC Technology Stock Sinks as Analysts Say Progress Is ‘Reversing." Meanwhile, Fortinet, a cybersecurity provider, fell on news that several deals have been delayed due to the impact of higher interest rates. Earnings disappointed the Street.

worst stocks 8-4-23

Final Thoughts

The market made another new high for 2023 on Monday. For the rest of the week, however, it was all downhill. The mega-cap tech stocks led the way down. The good news is that market leadership is continuing to broaden out.

I have been expecting a pullback of 5%-7%, which may have already begun. This would wring some of the froth out of the market and allow earnings to catch up with prices. As long as small-caps, mid-caps, and value stocks continue to outperform the S&P top 7 mega-caps, I think a 5%-7% pullback would improve the sustainability of this bull market.

More By This Author:

The One-Minute Market Report - Saturday, July 29
The One-Minute Market Report - Saturday, July 22
The One-Minute Market Report - Sunday, July 16

Disclaimer: This content is for educational purposes only, and is not an investment advisory service, nor an investment advisor, nor does provide personalized ...

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