After 9 consecutive positive weeks which resulted in a 20% rally, the S&P 500 fell over 2.5% last week. The Technology sector was the main area of the market driving both the massive rally as well as the swift decline. Even with the sharp reversal to close out the week, the S&P 500 Advance-Decline Line still rose. A big move down in the strongest sector while the rest of the market was largely unaffected seems like just what the market needed after a few months of gains.
Moments like these allow for investors to take a step back from the sectors that have been winning and look where the money that came out flows to in the coming weeks. During this sell-off there were notable winners and losers, but it wasn’t a situation where more traditionally defensive sectors were strong while the growth stocks were all being sold. By the end of the day Friday, the sector performance for the week would best be described as a mixed bag. Additionally, if you were to zoom out and see what the damage was, the S&P 500 is trading during the third week of May. A minor blip during a strong rally that began at the beginning of April.
Was this the beginning of the end for investors who have been piling into these aggressive growth stocks, or just another buying opportunity for those who are finally trying to join the party? For many of the stocks that fell sharply last week, no major trend lines were broken and no major structural damage was done. In the weeks ahead we’ll be able to see if this is just a minor blip along the way, or the tide has finally started to turn during a seasonally weak period in the market.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The content is developed from sources believed to be providing accurate information.
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