As of last Friday’s close, the S&P 500 closed nearly 20% higher from its bear market lows (i.e, a price decline of 20% or more from prior price highs) from last fall. Both the S&P 500 and another prominent TV benchmark, the NASDAQ, also hit new price highs for the year. In addition, a measure of expected volatility in the market called the VIX, fell below 15 for the first time since February 2020 according to BeSpoke Investments. The VIX indicator, when levels are high like they were, is often considered a measure of investor fear. The streak of VIX readings above 15 was the 3rd longest in 30+ years, with the only times longer were after the bust and after the Great Financial Crisis. I would not be surprised to see another negative sentiment streak end this week: the AAII investor sentiment survey has been negative for 15 consecutive weeks. That’s remarkably the 4th longest bearish streak since 1987. 

Some good things are indeed happening in the economy and markets. As mentioned in past commentaries, the economy remains more resilient than most expected. Last week was another case in point as the non-farm payrolls data was once again much stronger than expected — for the 14th consecutive month! The unemployment rate did tick up, but still essentially remains near 70+ years lows.

Another positive remains the buzz over artificial intelligence. Recently, tech funds attracted a record $8.5 billion in the week through May 31. A poster child of AI/tech enthusiasm is NVIDIA (NVDA), which recently became one of the top 10 largest stocks in the stock market. Could AI/tech stocks still move higher? Of course they could, but it’s useful to note the historical data showing how well stocks performed in the year(s) before they became part of the top 10 (i.e, they significantly outperformed) and how they performed in the year(s) that followed (i.e, they significantly underperformed).

Stay invested. Stay diversified. Stay disciplined.


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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital Investments, LLC, a registered investment advisor.