Weekly Market Outlook
By Donn Goodman
MarketGauge Pro
July 10, 2024
Welcome back subscribers and other readers. We all hope you had a relaxing and enjoyable Fourth of July holiday. As I said last week, we can never take our freedom for granted. As you get older, you realize and appreciate this more and more. God bless America…the land of the free!
Jumping right into our weekly perspective, it has been surprising to look back since the start of 2024. I am not sure that many Wall Street pros got the markets right. Most, I believe, were much more conservative and projected we might see a 10-15% total return for all of 2024.
Should we encounter a severe slowdown or even a recession, the S&P 500’s return may be less than its current level of up more than 16%.
As we will share with you later in this Outlook, one of our most dependable sources (who has been more accurate than most this year), Ryan Detrick of Carson, provides a few charts and statistics that suggest we will see more All-Time Highs in the S&P 500 for the remainder of the year and that we have more upward price appreciation to go.
Last week, we provided our readers with the different market index returns. As you would expect, the NASDAQ was the real winner, although the S&P 500 was not far behind. If you have not yet read last week’s Market Outlook, you can use the following link to review the article.
The major winners and biggest contributors to the S&P 500 for the first six months of 2024.
I have provided a table below (courtesy of The Motley Fool) that shows the five biggest individual contributors to the S&P 500 from January 1, 2024 to June 28, 2024:
The numbers above are staggering. Most of us cannot even fathom what $1 trillion dollars looks like so the idea that these five companies increased their aggregate market cap by $3.66 trillion is really quite hard to grasp.
The S&P 500 produced a 14.5% return for the first 6 months of 2024, so these 5 companies produced 63.2% of that return. In other words, those 5 companies helped contribute 9.16% of the 14.5% return of the S&P 500.
Without those 5 company’s contributions to the stock market, the other 495 companies only produced a return for the S&P 500 of 4.84%. Consider the fact that half of the S&P 500 companies (250 or more) had little to negative returns for the first 6 months of the year.
The Sector (Modern Family) winners were…
Given the heavy dose of technology stocks above one might think that technology (the Technology ETF – XLK) was the big winner. It was up 17.5% for the first six months but it was not the stand-out. Sister Semiconductor (a subset of technology) was the real winner with the Semiconductor ETF (SMH) up 49.08% for the first six months.
If you subscribe to our ETF Sector Plus model or NQ3, you are well aware that Semiconductor stocks have been the big winners for our models. If you would like more information about these models or any of the others, please contact Rob@MarketGauge.com. If you are a professional advisor and would like additional information about using these models to manage your client’s assets, reach out to Ben@MarketGaugePro.com.
The other sector winners for the first six months were…
Not surprisingly, a few of the other Sector ETFs that were the big winners for the first six months were not company stock ETFS but included mining and material ETFs. Their performance put them right at the top of the list. I say not surprisingly because Mish has been discussing (and suggesting these) for the past 18 months. Additionally, our ETF model(s) have also taken advantage of metals and mining as part of their recent portfolio allocations.
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The winner of the recent Presidential Debate was….
According to Mish, Gold may be the biggest winner from the debates.
We are aware that the markets tend to have a positive bias during major National election years, and we suspect that 2024 will be no different.
Mish recently wrote that the real winner from the debate was: Owning metals. We suggest that you read the article as it provides the reasons why you might consider adding the metals to your portfolio. Especially since, as noted above, Silver, Copper and Gold have been winners and that was amplified and reinforced this past week.
And the economic winner this past week was….
The jobs report came out on Friday. While still a healthy number with a little over 200,000 jobs created for June, the previous month’s job report was restated and showed basically zero job growth. The unemployment rate increased to 4.1%.
These are GOOD numbers if you are hopeful that the Federal Reserve may cut interest rates sooner than later. There are still many analysts and pundits who are hawkish and remain concerned that inflation is still too high and well above the Fed’s long-term target of 2%.
Then there are those who are more dovish and believe that rates are too high, too restrictive and are punishing consumers with sky high interest rates and keeping the homeowner industry from functioning properly. These people see yesterday’s jobs information as helpful in motivating the Fed to cut rates soon.
Yesterday, the futures betting pool jumped to over a 65% chance of a September interest rate cut and a better than 70% chance that we will see two (2) interest rate cuts, with the second coming after the election, sometime in November.
And the winner for the best investment month is July.
Again, if you have not yet read last week’s Market Outlook go back and review it. Especially the charts that dealt with the historical returns of July.
To reinforce the July narrative, we have taken information provided by our friends at Stock Trader’s Almanac (Jeffrey Hirsch) who have provided additional information below regarding the returns for July from the past 21 years. See below:
On average, over the last 21 years, nearly all of July’s gains have occurred in the first 13 trading days. Once a bullish day, the last trading day of July has had a bearish bias over the last 21 years. In the election years since 1950, July has tended to be a dull month filled with choppy trading.
Last week we mentioned that one of the reasons we believe the stock market has performed so well is due to the earnings of the S&P 500 companies coming in well above expectations. We have also commented that until earnings turn flat or begin to decelerate, it is unlikely that the market will nosedive beyond a normal correction. See the following data commentary and graph that follows:
Use the links below to continue reading:
- Global Earnings Trends
- AAII sentiment
- Relative Strength indicators
- Bearish Market Breadth
- Bullish implications of All-Time Highs
- Second half performance after a strong first half
- The Big View bullets
- Keith’s Weekly market analysis
The market’s price action and news flow can be confusing and intimidating, but investing in this environment doesn’t have to be. If you would like personal guidance and hands-on management of your assets with the assistance of tactical, risk-managed, strategies, please contact me at donn@mgamllc.com or Keith at keith@mgamllc.com.
