The month of July saw a positive run in the markets. For a nice change of pace, the returns were more spread out this past month instead of being more concentrated in the mega-cap tech names.
July Market Performance:
- S&P500: 2.99%
- NASDAQ: 3.83%
- DOW: 3.32%
- TSX: 2.08%
- FTSE100: 2.28%%
- HANG SENG: 4.00%
July Portfolio Performance:
- Oculus Conservative: 0.86%
- Oculus Balanced: 1.41%
- Oculus Growth: 1.60%
Regarding the previously mentioned market breadth. As a bit of context, in May, 30% of the S&P500 companies were trading above their 50-day moving average (the average closing price over the previous 50 days). In July, almost 90% of the S&P500 companies were trading above their 50-day moving average. This means that more companies in the index were contributing to the overall returns. This proved to be positive in July. On the flipside it can indicate that the index is overbought, but only time will tell if this is the case.
In terms of headline gains, two of the major boosts to the markets in July were CPI inflation readings in Canada and the US coming in lower than expected. In Canada, inflation dropped to 2.8% from 3.4%. In the US, inflation dropped from 4% to 3%. The market reacted positively to this news as it is viewed that the US and Canadian economies might be able to avoid recession and interest rate hikes might be nearing an end.
Lastly, the DOW index in the US tied a daily streak record not seen since 1987. In July, the Dow Jones Industrial Average was up for 13 days in a row. This has only happened twice in 125 years.
This run in the DOW contributes to the topic of market breadth and is also an early indicator that investors are starting to look for returns in more value blue-chip names such as Coca-Cola.
If you have any questions on the above information or your portfolios, please let me know and I am happy to help.
