Dont Blink!
Don’t blink because you might miss it. Market strategy shifted at the end of last week and beginning of this week. The 7 winners that have lifted market averages to records as recently as two weeks ago became pariahs within a couple of days. Sentiment changed overnight from large cap growth (7 stocks) to small and midcap stocks. As far as growth vs. value there was no question that small cap and value were the winners. Of course, with large cap growth stocks gaining 15% this year and mid and small cap hardly gaining, a reversion to the mean was not surprising, at least in retrospect.
This shift in sentiment towards small caps persisted for a couple of days but through the end of this week all indexes headed for negative territory. But in those few days immediately after the sentiment shift, gains in the favored sectors exceeded 3%!! Today, Friday, it is hard to tell exactly what is happening in markets as the worldwide internet outage caused by an upload of an update for Microsoft Windows by a software security company called CrowdStrike, highlights the vulnerability of technology that we expect to function flawlessly without giving it a 2nd thought. Airlines and hospitals are being acutely impacted and problems will continue for who knows how long. Currently, I am unable to enter trades on the Schwab website.
The Chairman of the Federal Reserve stated this week that inflation does not need to reach 2% to lower interest rates. He stated that if the Fed waits until achieving that goal, it will be too late to keep the economy growing and without causing a slowdown or possible recession. Intermediate and long interest rates have been moderating since these remarks. However, with an imminent election, the Fed might wait until after to lower interest rates. The oddsmakers have increased the odds of lowering interest rates in September, however, the Fed meets in August as well so we might get some better idea of the Fed thinking next month.
Summer is less than ½ way over so hopefully you have some fun vacation plans. We just returned from a wonderful trip of a lifetime to Alaska on a National Geographic small boat tour viewing nature up close. Bubble net feeding humpback whales over 2 days, orcas, bald eagles, mountain goats, puffins, sea lions (not Pier 39), seals and of course bears. Glaciers are awe inspiring but disappearing. Grab it while you can!!!
This website is informational only and does not constitute investment advice or a solicitation. Investments and investment strategies recommended in this blog may not be suitable for all investors. SAS Financial Advisors, LLC and its members may hold positions in the securities mentioned within this newsletter. SAS Financial Advisors, LLC is not responsible for any third-party content referenced.
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