Summer Postcard
The Quotedian - Vol VII, Issue 25 | Powered by NPB Neue Privat Bank AG
“Let us be thankful for the fools. But for them, the rest of us could not succeed”
— Mark Twain
Today’s comments, written on an early, somewhat overcast Sunday morning on Spain’s usual very sunny Costa Brava with this view,
are too long to be called a QuiCQ (www.quicq.ch), but also to short to be considered a proper Quotedian (www.thequotedian.com). Shall we call it a quick quoti or a extended quickie?
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In any case, today’s comments are purely equity related, as I have been told it has been a bloodbath for equities this past week.
Let’s see then. At a first glance I note that the S&P 500 is down two percent on the week - hardly a bloodbath given that the index is still up 15% and change on a year-to-date basis and up 33% since the market bottom in October of last year.
Or, another way to put last week’s “correction” into context is to look at a weekly chart:
First down candle after six consecutive up candles (weeks) in a row…
Now let me sparkle some pixie dust on top of all that:
Yes, you read that right. More stocks were up on the week than down. Impressive, no?
Ok, but then I am told the bloodbath was in the mega caps (aka Magnificent 7). Let’s check that too then:
Indeed, some investors’ darlings have corrected over the past five days. Let’s go for some (year-to-date) context then:
Turning to the NASDAQ 100 for a moment, that index indeed corrected four percent over the past week. Again, this “correction” comes after the index nearly doubled since the October 2023 lows:
The one index that DID nearly manage to enter into correction territory (10%+) was the Philadelphia Semiconductor index (SOX) was down eight percent:
I purposely do not cover any European and/or Asian markets or other classes this, I am on holiday after all and this is already getting too long, but leave you with two more US equity charts and a closing comment.
The Russell 2000 (US small cap stocks) last week - was up 1.7%!
And finally, the Russell 1000 Value index (a measure of US large cap Value stocks) is up nearly four percent over the past two weeks:
Takeaways:
The strongly overbought mega-cap segment has finally started to correct
There may be some more downside for market-cap weighted indices such as the S&P 500, but make sure not to miss the re-entry point
The broader market is not correcting but rather starting to join the rally, exactly as we outlined in our Q3 CIO Outlook report (click here)
Hence, don’t forget:
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Enjoy summer
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
The views expressed in this document may differ from the views published by Neue Private Bank AG
Past performance is hopefully no indication of future performance