RECORD HIGHS LEFT AND RIGHT! EXPECT BUYING OPPORTUNITIES IN JULY

July 01, 2021

The HCM-BuyLine® is positive, but we are a bit overbought and a pullback is warranted. If we do get some selling, this could be another buying opportunity. Technology has really picked up recently, and we added additional exposure two weeks ago which is panning out very well for us. 

COMPQ

On Tuesday, stocks had another strong day with the S&P 500 and Nasdaq indexes hitting new records. The Nasdaq breakout is especially impressive. In addition, the rising trendline along the bottom of the chart and the flat upper line along the top have the look of a potential "ascending triangle". That is normally a bullish continuation pattern. The Nasdaq breakout is indicative of a stronger technology sector which is also hitting a new record. Nine sectors are in the black with the leaders being communication services, technology, healthcare, and consumer discretionary.

Everyone knows I love new highs. The only way a stock, bond, commodity, or an index can double in value is to hit new highs the whole way up.

BUT…we do expect July to be a bit rockier, because most run-ups are followed by a period of consolidation. This should not surprise anyone, and if we get some volatility investors should be taking advantage and buying into it.

Payrolls increased 692,000 in June, above the consensus of 543,000. While this gain is smaller than in the previous month, the monthly average for Q2 still rose to 733,000, the highest level since August 2020, indicating continued robust job growth as more of the economy reopens and firms ramp up capacity. Payrolls have recovered nearly 2/3 of what was lost in the early months of the pandemic but are still 6.8 million short of their pre-recession high. At the current pace, the previous peak will be recovered by the spring of 2022.

Nearly half of the net job gains in June were in leisure/hospitality, as more restaurants reopened and the COVID restrictions on other social venues were relaxed. There were notable gains also in education/health care, professional/business services, and construction. In contrast, information and professional management services posted small losses. 


Wealth Watch

Sign up for our weekly news to hear from CEO and portfolio manager, Vance Howard.