InvesTech Research will be closed tomorrow in observance of the 4th of July. We hope you all have a fun and safe weekend!
Markets moved slightly higher in this holiday-shortened trading week while investors continued to digest significant internal volatility and uncertainty.
MACROECONOMIC UPDATE
- Consumer Confidence ticked up to 91.2 in June from a downwardly revised 90.6 in May. However, the Present Situation Index (which reflects consumers’ views on current economic conditions) fell three points as consumers grew more concerned about the labor market.
- The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index decreased from 54% in May to 53.3% in June, remaining in expansion (>50%) but indicating a slight decline in growth. The report also showed continuing contraction in employment and the 21st straight month of increasing prices in raw materials.
- The Unemployment Rate ticked down from 4.3% to 4.2%, remaining in the range of the last few years. At the same time, only 57,000 new jobs were added, well below the downwardly revised 129,000 in May. Overall, the Jobs report showed little meaningful change in the labor market, keeping Fed rate cuts effectively off the table for the coming months.
TECHNICAL UPDATE
- The InvesTech AI and Gorilla Indexes moved higher this week but both remain well below their all-time highs. If these Indexes reverse course and fall through recent lows, it would be an important warning signal.
- Bearish Distribution in the InvesTech Negative Leadership Composite (NLC) stalled out this week and currently sits at -11.9. It is not uncommon for leadership to appear artificially strong during periods of lower volume, like the days heading into a holiday weekend. As a result, it will be important to watch this indicator next week for a more complete picture of market leadership.
INVESTECH MODEL FUND PORTFOLIO
There are no changes to the Model Fund Portfolio this week, which is comprised of 56.5% long positions, 5% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 33.5% cash held in short-term Treasurys or a money market fund. This results in 51.5% net equity exposure.