FX Evolution: This Rare Signal Has Flashed Again for Stocks…
Some rare market signals are kicking off as stocks continue to break to new all-time highs. Market breadth is improving as well. That means it’s more than just tech stocks fueling the latest rally.
However, one of those signals suggest a potential recession could be ahead. With the first half of July over, one of the market’s most consistently bullish periods has ended. And from here, stocks could be in line to weaken.
Investor flows tend to slow down in late July and into August. Markets respond with a slowdown. It may not mean a full correction.
Part of the slowdown could be related to a market rotation. As other sectors take off and tech stocks trade relatively more slowly, stocks could be under pressure.
However, an increasing amount of market participation across a number of sectors remains a strong sign.
Financials, materials, and precious metals are showing the strongest returns right now. Those sectors could continue to lead in the second half of the year.
Over the next 250 days, however, it’s likely that markets will face at least some small pullback. Given that the current market rally has been going strong since November, a pullback from here would be healthy. And it could set up for markets to continue their gains over time.