I ran across this article with some advice for kids heading off to college. It’s equally useful for kids in their first couple of years at college. Have a read if you have a son or daughter that could benefit, if your friends have a son or daughter. Enjoy.
Ron’s Market Minute — Wet Blanket
I would pose that the character of the market appears to have changed. We’ve seen a higher high and a higher low, and by definition that is supposed to mean that the market has found a bottom and resumed an uptrend. That is, of course, good news. However, let’s look beneath the hood for a moment.
The following chart is a view of the leading sectors of the main Index (the S&P Index* as illustrated by the ETF ‘SPY.’ A reminder: about 80% by dollars weight of US stocks are represented by the SPY, so it’s a pretty good representation.
I’d like you to notice that this chart shows 3 of the 12 main sectors that make up the US Market Index.
The Red line is the consumer discretionary sector, Green line is the technology sector, Pink line represents the real estate sector, and finally, the Blue line shows the S&P Index. The time period on this chart is two months. Before that time, all sectors were heading down — note that these 3 sectors were all trending upward faster than the main index represented by the blue line. The rest of the 12 sectors (10 others) are currently under-performing the main index. Although the consumer discretionary and technology sectors are the two largest, it would look better if the rest of the sectors were not lagging the main index. Just a bit of a sign of caution- this is a ‘narrow’ market’ – one being led by just a few sectors.
Once (if) the market broadens out to include stronger performance from the rest of the sectors (or most of them), it will become a broader market, and thus a healthier market. So, while we’re all glad to see some up-trending numbers, let me add an additional wet blanket to your afternoon. This next chart shows the first 6 months of this year, printing daily price values of the S&P Index*.
Ronald P. Denk, CFP®
Denk Strategic Wealth Partners
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