The S&P 500 couldn’t quite clear the 4,300 level yesterday. It topped out at 4,298. One hurdle it did clear, however, was the bear market. With a close at 4,293.93, the S&P 500 moved more than 20% above the October closing low, which enables it to meet the technical definition of being in a new bull market.
Not everyone will be accepting of the bull market indication knowing that the equal-weight S&P 500 is up only 14% from last year’s closing low. Nonetheless, a 20% gain and a 14% gain in roughly eight months’ time is a hefty return by any standard that is cause for not only relief, but also for celebration.
The question on everyone’s mind is, will this good fortune for the stock market continue? The answer is unknowable today since it rests in what the future brings the market in terms of economic data, earnings growth, interest rate movements, and policy action.
Things, though, are on a better track with the market having established a pattern of higher highs and higher lows off the October lows, which is the look of an uptrend. The S&P 500 will need to clear 4,305 (closing high last August) to keep that pattern intact.
That is not a big jump from where it is now, yet this morning’s futures trade suggests the S&P 500 isn’t going to make a leap of any kind at the open.
Currently, the S&P 500 futures are up three points and are trading in-line with fair value, the Nasdaq 100 futures are up 52 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down 64 points and are trading 0.2% below fair value.
This mixed disposition ahead of the open has been a regular occurrence this week, but the broader market has still had some legs under it with non-tech and cyclical stocks doing most of the running.
The Vanguard Mega-Cap Growth ETF (MGK) is down 0.6% for the week, yet the market-cap weighted S&P 500 is up 0.3% while the Invesco S&P 500 Equal-Weight ETF (RSP) is up 1.1%. The Russell 2000 has been even better with a 2.7% gain.
There are a couple of mega-cap runners in today’s pre-market action, though. NVIDIA (NVDA) is up 1.2% and Tesla (TSLA), which has scored ten straight gains, is up 6.2% following a charging network deal with General Motors (GM).
The bump in NVDA and TSLA, along with a 3.9% gain in Adobe (ADBE), which was upgraded to Overweight from Equal Weight at Wells Fargo, and a 6.7% gain in DocuSign (DOCU) following its better-than-expected earnings report and outlook, has the Nasdaq 100 futures in a frontrunning position.
The “rest of the market” is kind of hanging around for lack of a better phrase. That’s not a bad thing given the nice run the rest of the market has had this week as it reflects a lack of concerted selling interest, which is what one typically sees in a bull market.
Of course, the rest of the market isn’t in a bull market at this stage, but one has to be impressed with its charge of late.
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Originally Posted June 9, 2023 – Some running of the bulls
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