For the past few weeks, there’s been a persistent headwind in the S&P 500 (SPY) that was unfavorable for growth stocks, particularly small and mid-cap selections. This risk-off mood was also manifested in plunging long-term yields, underperformance in cyclical stocks, and some profit-taking in overextended stocks and sectors. Fortunately, this headwind has tamped down, enabling some of our growth stocks to really shine. It’s not like small and mid-cap stocks have started outperforming as we would ideally like to see…but they’re no longer underperforming in the concerning way that they were for the last few weeks. I believe the major catalyst has been earnings season as small-caps and mid-caps have outperformed expectations. In this week’s commentary, I will do a recap of earnings season. Read on below to find out more….(Please enjoy this updated version of my weekly commentary published August 04, 2021 from the POWR Growth newsletter).
As usual, let’s start with the one-month, hourly chart. which shows that the market has been drifting higher out of its recent consolidation over the past couple of weeks:
I’m expecting that this low-volume, low-volatility drift higher could continue for a couple more weeks.
