Saturday, July 1, 2023

Charts of the Day

Stumbled across a couple of comments this morning that comport with, and illustrate, potentially key dynamics discussed herein of late.

Apparently 85% of the S&P 500's impressive first-half performance accrues to 7 stocks:

And we can not -- at this juncture -- attribute that performance to improving fundamentals:
HT Lynn Alden

So, given this historically weak breadth and lack of fundamental support, should equity market investors therefore panic? Or does it mean that the second half is destined for misery? 

Of course not, the fundamentals may indeed catch up to price. 

So, should we bet on it? 

Uh... no, not right here.

Like I said Thursday:
"Suffice to say that economic conditions still lean recessionary, that financial conditions remain somewhat tight, that market actors (individuals and pros) were uncertain about the go-forward prospects for equities to start the year and that they’re not-so (they’re bullish) today, that stocks are notably more expensive (i.e., rising prices have not, to this point, been remotely matched by the underlying fundamentals) today than they were to start the year, that, at the end of the day, overall equity market conditions are presently net-worse than they were on January 1…

In a nutshell, while anything can happen, the equity market holds greater risk of some meaningful downside action heading into the second half of the year than it did heading into the first."

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