Four-Hundred-Plus Stocks Just Joined the ‘Magnificent Seven’
RJ Hamster
Editor’s note: The so-called “Magnificent Seven” is on an incredible run…
Regular Chaikin PowerFeed readers know all about this group of stocks. These seven tech-related companies are up anywhere between 49% and 231% this year.
That brings us to this essay from our corporate affiliate Stansberry Research…
It comes from analyst Sean Michael Cummings. He’s a member of our good friend Brett Eversole’s True Wealth team. And the essay ran in the free DailyWealth e-letter on Monday.
In the essay, Sean takes a closer look at the market’s rally. As you’ll see, it’s not just about the Magnificent Seven these days. And that’s great news for stocks heading into 2024…
Four-Hundred-Plus Stocks Just Joined the ‘Magnificent Seven’
By Sean Michael Cummings, analyst, Stansberry Research
The bears have sung the same refrain all year…
“Only a handful of stocks are propping up the S&P 500 Index,” they argue. “This bull market can’t be real.”
It’s true – seven mega-cap companies have driven most of the market’s gains this year. I’m sure you know the companies I mean…
• Apple (AAPL)
• Alphabet (GOOGL)
• Meta Platforms (META)
• Microsoft (MSFT)
• Nvidia (NVDA)
• Amazon (AMZN)
• Tesla (TSLA)
The financial media has dubbed these companies the “Magnificent Seven” due to their size and influence on the market. And their performance in the past 12 months proves it…
The S&P 500 has returned about 23% this year. But if you take the Magnificent Seven out of the equation, that return drops to just 14%.
If you sat out of this year’s gains waiting for a broader rally, though, you’re about to get your wish…
Today, that rally is on. It’s not just about the Magnificent Seven anymore. And as I’ll show you, based on history, this change points to a big year ahead for the stock market…
Twenty years ago, one of the BIGGEST accounting fraud indicators triggered for Enron – before the company imploded. Now this same indicator has flashed bright red again… with corporate manipulation soaring to 40-year highs. One of Wall Street’s whistleblowers is stepping forward to give baffled investors some straight answers on what’s happening and where they should be putting their money in 2024.
America’s financial elite are engineering a sudden and surprising shift to the U.S. money system. It’s backed by the Treasury and Federal Reserve… and could trigger some very strange changes at your bank… And THIS little-known U.S. tech play is at the heart of it all.
Roughly 9 in 10 stocks are breaking out to the upside right now.
We can see that through the percentage of stocks in the S&P 500 that trade above their 50-day moving averages (“DMAs”).
A 50-DMA is exactly what it sounds like…
It tracks the average value of an asset for the past 50 days. It helps smooth out the “noise” of daily data to give us a clearer picture of the short-term trend.
When a stock breaks out above its 50-DMA, it means the price is rising faster than it has in the recent past. That tells us the stock is gaining momentum.
That’s what we’re seeing in the broad U.S. market today. Check it out…
As you can see, the S&P 500 is breaking out above the 50-DMA for the first time in months. But there’s more to this story…
The index is breaking out with breadth.
At the start of December, 86% of companies in the S&P 500 traded above their 50-DMAs. That means roughly 430 stocks surged higher – the broadest breakout since July. Take a look…
I was curious what this kind of broad breakout implied for future returns. So I tested other cases where 85% of stocks or more were trading above their 50-DMAs.
Since 2001, stocks have surged this broadly about 7% of the time. So it’s a relatively small sample size. But this signal still led to market-beating returns. Take a look…
Stocks have returned about 6% annually over the past 22 years. But buying during broad rallies like we’re seeing today led to outperformance…
Stocks more than doubled their returns for the six-month period after moves like these. And they more than doubled their typical 12-month returns, too.
What’s more, this signal has been highly reliable…
Stocks were positive about 97% of the time in the year following the signal. And in the worst 12-month period, stocks were down just 5%.
So if you’ve been waiting for the broad rally to buy stocks, now is a good time to act.
The market is surging across the board. And that points to even more upside in 2024.
Good investing,
Sean Michael Cummings
Market View
Major Indexes and Notable Sectors
# HLD: BULLISH NEUTRAL BEARISH
Dow 30
+0.420%
12
17
1
S&P 500
+0.320%
165
286
46
Nasdaq
-0.090%
43
47
8
Small Caps
+2.780%
722
975
227
Bonds
+2.600%
Energy
+2.940%
1
17
5
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Real Estate
+6.61%
Materials
+4.61%
Financial
+4.54%
Industrials
+4.19%
Energy
+4.18%
Discretionary
+3.74%
Information Technology
+3.03%
Health Care
+2.62%
Utilities
+2.47%
Communication
+1.50%
Staples
+0.91%
* * * *
Industry Focus
Health Care Services
11
39
12
Over the past 6 months, the Health Care Services subsector (XHS) has underperformed the S&P 500 by -8.33%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #16 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
USPH
U.S. Physical Therap
RCM
R1 RCM Inc.
AGTI
Agiliti, Inc.
* * * *
Top Movers
Gainers
SEDG
+16.60%
ENPH
+11.72%
ZBRA
+11.34%
ALGN
+11.09%
MRNA
+9.25%
Losers
AEE
-7.75%
EXC
-7.56%
AJG
-7.41%
EG
-6.73%
ADBE
-6.35%
* * * *
Earnings Report
Reporting Today
RATING
BEFORE OPEN
AFTER CLOSE
DRI, PGR
HEI
Earnings Surprises
LEN
Lennar Corporation
Q4
$5.17
Beat by $0.57
COST
Costco Wholesale Corporation
Q1
$3.58
Beat by $0.15
JBL
Jabil Inc.
Q1
$2.60
Beat by $0.02
* * * *
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