S&P 500's Historical Setup

Estimated read time: 2 minutes and 13 seconds

In this week’s newsletter:

1. Market recap

2. Top holdings: what I am buying & selling

Market Recap

YTD returns:

• S&P 500: +7.66%

• Nasdaq: +15.34%

• Russell 2000: +1.71%

• US Dollar ($UUP): -0.25%

• Gold ($GLD): +8.61%

There was virtually no economic data to pick through this week; next Thursday is an important GDP report that will show how much the economy is slowing (yes, it's expected to slow)

In light of no data, let's cycle through what the world of Twitter had to offer this week!

Did you know that Apple is the largest weighting of the S&P 500 dating back to 1980?

• IBM in the mid-80s - lead into a recession (Black Monday)

• MSFT in the late 90s - dot com bubble

• Exxon in the mid-2000s - led to the Great Recession

• Apple in 2023 - is leading into ____________ ?

Can you say big tree fall hard?

While the market is holding steady this year, a lot of that comes from just a small fraction of the S&P 500 components.

In fact, by looking at the below chart, there's ~10 companies holding the entire index afloat. The rest are...well...hanging on for dear life.

It's no surprise that the big companies last longer than the smaller ones. They are, well, bigger. They have more cash, leverage, etc. to withstand turbulent economic conditions.

But take Apple for example - if people stopped buying iPhones, their business would hurt. And if you read last week's post, the consumer is not exactly 'healthy'.

Not even Apple, despite how massive they are, can avoid the affects of a weak consumer.

And the funny thing about big companies - slowing growth looks a lot BIGGER compared to the rest.

Apple reports economic reality on May 4th; what do you think the S&P 500 will do if they report slowing growth?

And just when you thought I was going an entire post without mentioning interest rates, you're wrong!

The probability of a May hike is likely; and now June's probability has risen >0%.

As we raise interest rates into a slowing economy, the probability of s*** hitting the fan increases.

In The Account | my top holdings

1. GOLD - $GLD

   1. Phenomenal buying opportunity on Friday, this position is now ~8% out of a max 12% in my portfolio

   2. No issue buying anything Gold correlated either - $GDX

   3. Oh, and still beating the S&P YTD

2. BONDS

   1. These are getting bigger, faster

   2. $BNDD, $EDV, $TLT, $IIGD

On The Radar | positions I want to build / sizing up

1. CHINA

   1. China is the only economy accelerating their growth. I'm waiting for the right signal to build upon.

2. UTILITIES & HEALTH CARE

   1. Two good sectors in a slowing growth environment and their signal is starting to sniff that out - $XLU, $XLV

Off The Grid | removed positions / short selling opportunities

1. TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX

2. RETAIL - $XRT

3. HIGH BETA - $SPHB

4. CRYPTO - $BITO, $MSTR

5. HIGH YIELD - $HYG

6. ENERGY - $XOP

7. FINANCIALS - $XLF

8. INDUSTRIALS - $XLI

Until next week....

-BW

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.