As we approach the end of August, many investors may be tempted to ignore the markets in the next two weeks, traditionally among the lightest trading days of the year. However, there is still a powerful rally occurring that should not be overlooked.
CNBC’s Robert Hum recently reported that both the S&P 500 and Nasdaq Composite have been on an eight-day winning streak, the longest advances since late last year. The S&P 500 has seen a 7% increase over the past eight trading days, marking its strongest streak since 2003. Additionally, market breadth, which measures advancing versus declining stocks, has been on a tear with the New York Stock Exchange advance/decline line hitting an all-time high.
While the tech sector may be lagging, defensive stocks such as real estate, healthcare, and consumer staples are leading the way. Big-cap tech companies have seen a mixed performance this month, with Meta and Nvidia showing gains while Alphabet and Amazon have dipped slightly.
On the positive side, the soft landing scenario is still intact, with strong job growth, expected Fed rate cuts, and stable earnings providing support for the markets. The recent volatility in early August may have helped unwind some crowded trades, potentially reducing market volatility.
However, it’s important to note the potential negatives as well. The end of August and the next two weeks typically see a significant drop in trading volume, which could impact market movements. September and October historically have been challenging months for the markets, and high valuations leave little room for error.
At Extreme Investor Network, we provide unique insights and analysis to help investors navigate the markets with confidence. Stay informed with our expert advice and stay ahead of the curve in your trading journey.