Markets experienced volatility this week as big tech earnings brought AI profitability back into question and uncertainty regarding the conflict in the Middle East increased. Meanwhile, defensive investments continued to show resilience, holding up well during the selling pressure.
MACROECONOMIC UPDATE
- New Home Sales increased slightly in June, rising 1.6%. The current rate of sales is 5.6% below last year.
- The Conference Board Leading Economic Index (LEI) fell -0.2% in June after two months of increases. The Index was dragged lower by weak consumer expectations as it continues to warn of potential economic headwinds.
TECHNICAL UPDATE
- After dissipating over the last few weeks, Bearish Distribution reemerged in the InvesTech Negative Leadership Composite (NLC). This is an important trend to watch. If Distribution continues to build, it will indicate that danger likely lies directly ahead.
- The InvesTech Gorilla Index dropped this week as mega cap momentum stocks came under pressure. If this Index falls below its recent lows, it will be an important sign that the leaders are breaking down, and the broader market is likely to follow.
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.