FX Evolution: Nobody Is Talking About This…
The S&P 500 has popped out of bear market territory, with a 20 percent rise off of its lows this week. However, shares moved back down on hitting that level. Stocks now stand at one of their longest bear markets since 1948.
This potential bear market could fully end in the coming weeks, as other sectors outside of tech are starting to move higher. A continued rally over 4,200 on the S&P 500 will confirm the new bull market.
That’s amid concerns of a slowing economy. Even with rising interest rates, the labor market remains hot. Even revised numbers from prior months show considerable growth.
But investors generally remain a bit on the cautious side. That’s seen with sentiment, which isn’t hugely bullish. And investors continue to show strong demand for Treasuries, even after the debt ceiling has been resolved.
Meanwhile, consumer discretionary stocks are trading at their widest spreads compared to the overall market. That’s usually a sign of danger in the market, and a sign that the S&P 500 may peak around 4,300.
Finally, we’re in a pre-election year. Historically, this year is one of the poorer performers on average. And stocks tend to see a selloff in the summer months that goes into the fall. So investors may want to take some profits here, with stocks at their highs for 2023, ahead of a possible pullback.