The One-Minute Market Report - Sunday, Aug. 20

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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 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 down 2.1%.

S&P 500 daily prices 8-18-23


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. 

S&P 500 monthly returns 8-18-23

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The Bull Market Dips Below the Trend Line

This chart highlights the 22.2% gain in the S&P 500 from the October 2022 low through Friday's close. The index is now 8.9% below its record high close seen on Jan. 3, 2022.

S&P 500 bull run 8-18-23


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 7.9%, 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. 

golden cross 8-18-23

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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 since the Oct. 12, 2022 low for additional context.

The best performer last week was volatility, as investors looked for ways to protect their gains from further downside in the market. The worst performing asset class last week was blockchain, which gave up 9.6%. This asset class is highly correlated with Bitcoin and other cryptocurrencies, which came under heavy selling pressure last week.

asset class returns 8-18-23

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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.

All 16 sectors were down for the week, but energy stocks held up the best. Construction was the hardest hit, losing 4.33% for the week.

S&P 500 sector returns 8-18-23

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.

All of the equity groups were down last week. Large-cap growth held up the best. The worst performing group was small-cap value, which lost 3.54%.

equity group performance 8-18-23

Image Source: ZenInvestor


The S&P Top 7

Here is a look at the seven mega-cap stocks that have been leading the market all year. Nvidia was the only winner in this group, up 6% for the week. Tesla was the biggest loser, down 11.2%. 

S&P Top 7 returns 8-18-23

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The 10 Best Performing ETFs from Last Week

Carbon Credits captured two of the ten spots on the ETF leader board last week. Bonds captured 3 spots as investors rotated away from equities and sought the relative safety that bonds provide.

Best ETFs 8-18-23

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The 10 Worst Performing ETFs from Last Week

Bitcoin had a tough week, sending the Bitcoin ETF down 11.6%. Solar energy continues to struggle this year as high interest rates are making it more expensive for consumers.

Worst ETFs 8-18-23

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. US Steel received a surprise $7.8 Billion bid from James Bouchard. Carlson Capital, a Dallas-based hedge fund, acquired a significant stake in Glatfelter Corp.

Best stocks 8-18-23

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. Hawaiian Electric cratered due to investor concerns about their culpability for the wildfires in Hawaii.

Worst stocks 8-18-23

Image Source: ZenInvestor


Final Thoughts

The S&P 500 was down 2.1% last week. I have been expecting a pullback of 5%-7%, which has now begun. I see this as a positive development since it will 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, Aug. 12
The One-Minute Market Report - Saturday, Aug. 5
The One-Minute Market Report - Saturday, July 29

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

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