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Price Action Lab Blog wishes our subscribers a great Labor Day holiday!
Included in this report:
- Weekly summary.
- Update on market positioning.
- Stock market forecast.
- Capital markets update.
1. Weekly Summary (August 26–August 30, 2024)
- After consolidating for about two weeks, stocks moved higher before the holiday.
- Large-cap stocks (SPY) gained 0.3% and ended the week 0.2% below the all-time closing highs.
- Long-duration bonds (TLT) fell 1.9% on the week due to conflicting signals from weekly jobless claims and PCE reports.
- Commodities (DBC) ended the week down 0.7%. For the week, the spot price of crude oil fell 1.7%.
- The US dollar index (UUP) rebounded to end the week up 1.1%.
- Gold (GLD) fell 0.3% and has been in a rangebound market for about two weeks.
- Since January 3, 2022, bonds (TLT) have been down 29.4%, while large-caps (SPY) have gained 23.2%.
- For the week, the equally weighted magnificent seven stocks gained 1.6%. Following the earnings report, Nvidia’s stock plunged 7.7%.
- The financials sector (XLF) gained the most this week, by 2.9%, while the technology sector (XLK) fell the most, by -1.6%.
- Berkshire Hathaway Inc. (BRK.B) became the eighth stock in the U.S. to ever reach a trillion-dollar capitalization.
The $1T club
Berkshire Hathaway Inc. (BRK.B) became the eighth stock to ever reach a capitalization of one trillion dollars. TSLA briefly joined the club in October 2021, but afterward its capitalization has dropped significantly.
The above table reveals that BRK.B is the only stock in the one trillion club with a low P/E (14.9) and a beta lower than 1. The other stocks, mainly in the tech sector, have a large P/E, and other than GOOG, their beta is greater than 1.
Based on our analysis, BRK.B joining the trillion-dollar club is a significant development for reasons we will discuss in Section 4 below.
2. Update on market positioning
We use two cross-sectional momentum long-only strategies that generate signals for capital markets and factor ETFs. Year-to-date, both strategies outperform the S&P 500 total return by a wide margin. The equally weighted performance year-to-date is 22%.
Last update: Friday, August 30, 2024, after the market close.
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Specific disclaimer: This report includes charts that may reference price levels. If market conditions change the price levels or any analysis based on them, we may not update the charts. All charts in this report are for informational purposes only. See the disclaimer for more information.
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Charting and backtesting program: Amibroker. Data provider: Norgate Data
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