If It Weren’t For These 7 Stocks….

June 5, 2023

Mish's Daily

By Mish Schneider

Apple, Nvidia, Meta, Alphabet, Microsoft, Amazon, and Tesla have now been penned as the “Magnificent 7.”

Only around 25% of the S&P 500 stocks have outperformed the benchmark, while these stocks continue to show massive leadership.

The Nasdaq is up around 15% year-to-date, outpacing the S&P.

Smaller cap stocks have struggled way more.

The Russell 2000 is flat this year, largely because bank stocks have dealt with significant deposit outflows.

Some say that tech has led every market rally so who cares if only 7 stocks lead the charge. I agree with that statement…

To a point.

Those of us who have a family-an Economic Modern Family, know that watching small caps and retail is the best way to assess how long tech can rally and lead for.

In the AI generated cartoon, both Grandpa Russell (IWM) and Granny Retail (XRT) look a bit disgruntled.

More importantly, the trading range prediction for this year along with stagflation-well, it depends where you look.

Of course, SPY and QQQ are outpacing thanks to tech, AI and our 7 huge winners.

Look at IWM and XRT (along with transportation, biotechnology, even Bitcoin with its $10,000 range).

All are naggingly in that trading range. That is stagflation.

XRT and IWM are not only stuck, but they are also teetering if neither can rally from here.

We love to zoom out to a monthly view.

The chart shows our 80-month moving average (green), which represents a 6–8-year business cycle.

We could call it our soft-landing barometer.

Grandma or the consumer is holding on after last Friday’s bounce. But marginally unless it clears 60.00.

IWM is further up from the 80-month MA, but nowhere near the 23-month moving average (blue) or the 2-year business cycle or period of growth.

We could call that our GDP and inflation indicator.

Yes, SPY, QQQ, SMH (Semiconductors) have cleared into a shorter-term business expansion cycle.

SPY just cleared in June while NASDAQ and SMH cleared in May.

Now, all eyes on our patriarch and matriarch.

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
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