‘Magnificent 7’ Lead Market Rally, but for How Long?
2023.06.06 03:26
Apple (NASDAQ:), Nvidia (NASDAQ:), Meta Platforms (NASDAQ:), Alphabet (NASDAQ:), Microsoft (NASDAQ:), Amazon (NASDAQ:), and Tesla (NASDAQ:) have now been penned as the “Magnificent 7.”
Only around 25% of the stocks have outperformed the benchmark, while these stocks continue to show massive leadership.
The is up around 15% year-to-date, outpacing the S&P.
Smaller cap stocks have struggled way more.
The is flat this year, largely because bank stocks have dealt with significant deposit outflows.
Some say that tech has led every market rally, so who cares if only 7 stocks lead the charge?
I agree with that statement to a point.
Those of us who have a family-an Economic Modern Family know that watching small caps and retail is the best way to assess how long tech can rally and lead.
Both Grandpa Russell () and Granny Retail () look a bit disgruntled.
More importantly, the trading range for this year, along with stagflation, depends on where you look.
Of course, S&P 500 (NYSE:) and Invesco QQQ Trust (NASDAQ:) are outpacing thanks to tech, AI, and our 7 huge winners.
Look at IWM and XRT (along with transportation, biotechnology, even with its $10,000 range).
All are naggingly in that trading range. That is stagflation.
XRT and IWM are not only stuck, but they are also teetering if neither can rally from here.
We love to zoom out to a monthly view.
The chart shows our 80-month moving average (green), representing a 6–8-year business cycle.
We could call it our soft-landing barometer.
Grandma or the consumer is holding on after last Friday’s bounce. But marginally, unless it clears 60.00.
IWM is further up from the 80-month MA but nowhere near the 23-month moving average (blue) or the 2-year business cycle or period of growth.
We could call that our and indicator.
Yes, SPY, QQQ, and (Semiconductors) have cleared into a shorter-term business expansion cycle.
SPY just cleared in June, while Nasdaq and SMH cleared in May.
Now, all eyes are on our patriarch and matriarch.
ETF Summary
- S&P 500 (SPY) August 2022 high 431.73-and of course 420 now key
- Russell 2000 (IWM) 180-now must hold while still miles from its 23-month MA 193
- Dow (DIA) 23-month MA 337 pivotal
- Nasdaq (QQQ) 370 resistance 350 now closest support
- Regional banks (KRE) Right up to that 42.00 critical level and dropped
- Semiconductors (SMH) A drop near 138-140 would be a decent correction
- Transportation (IYT) 230 level is key, plus today, a very small trading range/inside day
- Biotechnology (IBB) 121-135 orange
- Retail (XRT) 60 key now as is 56.25
