After six months of a declining market, investors are shaking off any potential headwind and their fear of missing out has taken full control. Any positive news about earnings is enough to drive the markets higher these days, and there’s no shortage of companies beating earnings estimates. After yesterday, 70% of Q2 earnings have been reported and market sentiment has greatly improved. The earnings catastrophe that was supposed to happen failed to materialize.
Despite most technical indicators showing an overbought market, overbought clearly does not mean this market is ready to turn over. We are pinned up against the early June-highs and a close above these levels would certainly be a major feat.
The technology sector is leading the charge on the relative performance charts, despite it being a laggard over the last six months.Â
We could see another strong month ahead for tech and there’s one symbol that you may want to add to your trading list.
Keep reading to learn more about the one symbol that could have a strong August.
First, let’s take a look at the Dow Jones U.S. Software Index ($DJUSSW). The chart below shows the seasonality performance against the S&P 500 index from 2013 to 2022. As you can see, the software index has beaten the benchmark index 8 out of 10 years during both July and August, the strongest two months. The average outperformance has been 2.1% in August, which is also the highest in all 12 months.
One way to play this would be to trade the Technology Sector ETF, XLK. Another way is to use your favorite scanner and search specifically for software companies that fit your criteria.
Either way, it certainly seems like market conditions, market sentiment, and historical performance is showing a way for part of the tech sector to move higher in August.
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Jeff
Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society
As we look for trade ideas, the U.S. government just handed over a potential big win for one industry. Will we see a boost to the clean energy stocks after the Senate voted to unlock nearly $370 billion this past weekend?
What does all of this mean for the future? Are the jobs reports good or bad?
Keep reading to find out the key levels for the S&P 500 and what reports are likely to move the markets this week.
To close out the week I have a trade idea for you with a potential 44% return in the next 43 days.
Get Today’s Trade Idea (and more)
As the markets remain relatively flat, theta decay is your friend this week so I thought I’d write about a trade that has been showing remarkable accuracy lately.
This one trade has a 90% accuracy rate. Keep reading to find out more.
It wasn’t too long ago that the market was reacting (or overreacting) to every piece of news that was published. Over the last month and a half, the markets have settled down some. That can be seen from the VIX (volatility index) which has been steadily decreasing since the mid-June market lows.
That begs the question: if the market is forward-looking, why do we put so much attention to GDP numbers that are identified and then reported after the quarter is complete?
The Mediots Are At It Again
As we’ve explained over the last few months, it was likely that the U.S. economy would meet the ‘technical’ definition of a recession (two or more consecutive quarters of negative GDP).
It’s official, the Fed increased interest rates by 75 basis points for a second straight meeting. Inflation remains high, job growth is slowing, and consumer confidence is at historic lows.
Maybe that’s why investors are rushing toward dividend investing to protect their portfolios. With a recession likely on the horizon, if we’re not there already, and dividend payouts projected to increase throughout 2022, there are three quality companies you should consider for your portfolio.
What can learn from the major companies that reported earnings?
Alphabet (GOOG/L) released earnings and missed overall, but their ad revenue beat expectations so their stock went up after hours. Microsoft (MSFT) missed on cloud revenue and ad revenue and their stock went down. Great.
Could we see the car loan industry play out like the subprime mortgage crisis in 2008?
Well, that depends. Do consumers still have money to spend? Are their jobs still available? What is going on with the rest of consumer spending?
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