The stock market advance is shifting towards new sectors and new stocks, leaving the “Magnificent Seven” in the past. John Buckingham from The Prudent Speculator owns four of the Magnificent 7 stocks but not at the S&P’s weights. The attention on these stocks may lead investors to feel like they are missing out, but trends in the market can change quickly. Themes that have driven the market in the past include the Nifty Fifty stocks in the 1960s, oil in the 1970s, Japanese stocks in the 1980s, and the Dot Com Bubble in the 1990s. The key takeaway is that thematic investing is often backward-looking and trends can shift rapidly.
Elliott Gue from the Energy and Income Advisor points out the performance of energy-related stocks in 2024. The S&P 500 Energy Index and the Alerian MLP Index have shown strong gains, despite challenges in the industry. CrossAmerica Partners LP is highlighted as a potential investment opportunity, with strong financials and a high dividend yield. The company has effectively managed costs and acquisitions to offset softer demand for fuel. The Federal Reserve’s pivot to lower interest rates could benefit the company by reducing debt costs.
Matthew Miller of CFRA Research recommends Freeport-McMoRan Inc. (FCX) as a strong buy. The company is a major copper producer with assets in Indonesia, North America, and South America. FCX has a solid track record of execution on growth projects and top-tier copper reserves. The company’s leverage to the copper market and outlook for stable production support a bullish view on the stock. The increasing demand for copper in technological innovations and decarbonization initiatives is expected to drive growth in the market.
David Keller from StockCharts.com shares his technical analysis of the stock market at the end of Q1 2024. He notes that the advance is broadening to include new leaders in sectors like financials, industrials, and basic materials. Around 80% of S&P 500 names are trading above their 200-day moving averages, indicating a healthy market environment for stock pickers. Keller highlights value-oriented, non-tech groups as showing better results in his scans of stocks making new highs and lows. He mentions specific plays in the gasoline retail business and indicates caution for a popular Big Tech stock.
Keller also discusses the strength in gold and Bitcoin, with positive chart patterns for both assets. He previews the Investment Masters Symposium Silicon Valley in May 2024, where he will cover trading methodologies, process-oriented tips, and chart-reading lessons. Overall, the stock market is experiencing a shift in leadership, offering opportunities for investors to explore new sectors and stocks beyond the traditional standout performers. Thematic investing may be intriguing, but being aware of changing trends and market dynamics is essential for long-term success in investing.
