From what I can see, we are getting close to the end of higher interest rates from the Federal Reserve. This has pushed money out of stocks and into U.S. Treasury Bills, CDs, and high-yield money market funds.
It is likely that we'll see just one more 0.25% rate hike in June or July. I'm already seeing some quantitative easing (Fed Reserve buying securities on the open market) - this is bullish, too. Looking at the importance of the Fed Reserve vs. the Economy, the Fed seems to have greater influence for now.
My favorite market timing cycles flashed the "green light" in January and became even more bullish last week.
I'm a bit nervous about the U.S. debt ceiling discussions, like everyone else. We'll likely know if this gets resolved by June 5th.
There are still things to worry about... commercial real estate and the lending markets. The economy could already be in a recession (albeit a very modest one).
Also, what makes this market different is a lack of breadth. Leadership is narrow. Most stocks are still down.
All gains for the S&P 500 index during the first six months of this year could be attributed to just 8 tech stocks. These include all the usual suspects (AAPL, META, TSLA, NVDA, etc.). At $1 trillion, Apple has a larger market capitalization than the entire Russell 2000 index of small/mid-cap stocks.
This means that a small shift away from dominant tech stocks to the small cap growth category could result in some explosive gains (similar to what we saw in January).
Best guess here... debt ceiling crisis gets resolved just before the deadline, the Fed stops rate hikes this summer, market leadership broadens with small-caps and blue-chips gaining momentum in 2nd half.
This is the most excited I've been about stocks in a while!
