The S&P 500 closed at a new record high on Tuesday, once again challenging the repeated calls that the market had already peaked. Semiconductors were again at the centre of the move.
Marvell gained almost 6% after management raised its long-term revenue expectations during a presentation to investors, Broadcom added around 4%, AMD climbed almost 3% after Citi raised its price target to $800, while Nvidia hit another intraday record.
Bond yields remain one of the main risks for equities, and with Brent back above $100 a barrel, inflation has not gone away. Oil firmed again in Asian trade as tensions between Saudi Arabia and the Houthis escalated, alongside concerns around possible supply disruption in the Gulf of Mexico.
From a technical perspective, Tuesday’s close pushed the S&P 500 above the range it had been trading within since August.
The 50-day simple moving average, currently around 7,675, now sits below as an important support level if the index pulls back. The breakout still needs to hold, and a move back below 7,800 would raise the risk of another false break. Even then, pullbacks around all-time highs are normal and can be short-lived before buyers step back in. If the breakout holds, 8,000 becomes the next obvious level to watch. Our approach is simple: side with the established bull trend rather than trying to predict every correction along the way.
The S&P 500 is now up around 14% for the year, but not everything is moving together. Technology and semiconductors remain strong, while Seagate and Western Digital fell sharply on Tuesday. Nuclear and power stocks also stood out after Google signed a 20-year agreement with Constellation Energy that will add 890 megawatts of new nuclear capacity.
That is why we continue to focus on where the strength actually is rather than assuming that a record high in the index means every stock is performing well.
From a portfolio perspective, we stay with the trend and continue buying and compounding the strongest stocks in the strongest sectors. Weaker stocks are removed through our rebalancing process, allowing us to redirect capital towards the areas of the market that continue to show the strongest trends.
The Fed minutes later today are worth watching, particularly with the 10-year Treasury yield still above 5%. Any sign that further rate hikes remain firmly on the table could put some pressure back on equities. But the bigger picture is still clear: the S&P 500 is at record highs and the trend remains up. If the index can hold above 7,800, 8,000 becomes the next level to watch. Until price tells us otherwise, we continue to side with the bull trend.
Leave a Comment