Benchmarks Bounce
What is it?
Last week the SPDR S&P 500 ETF Trust (SPY) moved back above the lows made in June of this year. The week before, SPY had broken that prior low for the year to date. Here is the daily, year-to-date chart of SPY as of mid-day Thursday, October 6, 2022. You can see the prior low marked with a black line.
*Tradingview.com
As shown above, the price has bounced since closing below that level on Friday, September 30 of this year.
Why does it matter?
While we did buy into some equities last week, we will wait to invest more cash depending on if this minor bounce holds up. We are not attempting to pick the bottoms of the market. It seems like this black line may turn into a support level as prices bounced from it twice this year. That is not to say that the value of SPY cannot continue to break down lower. We will continue to utilize our process and the research available to us to best navigate the market environment that is presented to us.
Cathie Woods Banking on Small Stocks
What is it?
Due to her rapid growth in recent years, Cathie Woods is a leading voice in the investment world.
“Cathie Wood’s latest dip-buying binge appears to be largely focused on smaller stocks.”**
“Barring a few transactions in names like chipmaker Nvidia Corp. and Tesla Inc., Wood’s Ark Investment Management LLC has largely been picking up smaller stocks including automation software provider UiPath Inc., biotech firm Ginkgo Bioworks Holdings Inc. and space systems company Rocket Lab USA Inc. since Sept. 13, according to data compiled by Bloomberg.”**
Why does it matter?
Small Caps have led the markets lower during the last year and some investors are taking notice. Some may start to see opportunities to buy these assets at lower prices.
Historically, small cap stocks have presented high returns while being riskier investments. We will take into consideration some of the investments that Cathie is making as we continue to build our Farm Team model allocation.
Other articles we found interesting this week:
Elon Musk’s texts suggest he’d soon make ‘drastic’ changes to Twitter
Cannabis stocks rocketed to record day after Biden lit the fuse
Current 401(k) portfolio
Our last portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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Sources:
*Trading View. “SPY”. 10/6/2022. Trading View. https://www.tradingview.com/chart/?symbol=AMEX%3ASPY
**Abhishek Vishnoi. “Cathie Wood’s Dip-Buying Binge Mainly Focusing on Small Stocks”. 10/6/2022. Yahoo Finance. https://finance.yahoo.com/news/cathie-wood-dip-buying-binge-075848930.html
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