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S&P 500 Continues It’s Surge To 2,600
The S&P 500 continues to run higher, with the index surging to nearly 2,530. It is now about 70 points from our year-end target of 2,600 which has to make you wonder if 2,600 to low? Fund managers also continue to badly underperform the broader S&P 500 index, which is pushing the risk-on trade.Â
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Funds Are Far Behind
Most hedge funds continue to underperform the broader index by a relatively wide margin. The Eurekahedge North American Hedge Fund Index was up by only 6.1 percent through the end of September, still severely underperforming the S&P 500 Total Return and the S&P 500 Index., which are both now up by nearly 15 and 13 percent respectively.
Hot Sectors- Risk-On!
The industries that are moving are the Techs, Biotech, and Financials, which have been on fire the past few days. The NASDAQ Biotech ETF ($IBB) is now up nearly 28 percent, while the Technology Select SPDR ($XLK) is now up by nearly 23 percent. The Financial Select Sector SPDR ($XLF) is up about 12 percent, but a lot of that move has come only in the last month. The iShares PHLX Semiconductor ETF ($SOXX) is now up nearly 30 percent on the year.Â
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Small Caps Surging Too!
The small-caps are starting to run with the Russell 2000, making a monster move higher since bottoming in mid-August. The Risk-on trade is happening right now in a huge way. Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
Money In, Money Out
The money is rotating right out of the risk-adverse groups, like Gold ($GLD), Utilities ($XLU), Consumer Staples ($XLP) and Treasuries ($TLT), and moving into the risk-on sectors, and that is good for rising equities.Â
Funds Playing A Game of Catch-up
It tells of investors and fund managers that are severely underperforming the markets, and are desperately trying to make the underperformance narrow. If the market is to continue to rise, it is because the Tech, Biotechs, and Semis are leading the market higher and for no other reason.Â
A Run To 2,600
If these sectors aren’t performing, then the S&P 500 will be going nowhere. If you want to know which direction the broader market is headed, watch the best performing sector, wherever they go, the rest of market will be sure to follow.Â
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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