Summer vacation

The summer break is underway. The markets have scaled back their activities and everything is proceeding at a more leisurely pace. We too will relax a bit in July and use the quiet time to recover. The services will continue to run as usual, but the commentary will be scaled back somewhat. But first, a look at the big picture in the market.

In our annual outlook in January, we had identified the major crossroads in the very long-term trend channel. When this boundary was then tested and held in February and March, we were very confident for the coming months. Accordingly, the steadily rising markets have not been a surprise so far. During the increased volatility of May and June, the price fluctuated around the middle of the trend channel and was recently able to establish itself firmly above it again. All confirmations of both the trend and the inner strength of this market.

The upper end of the current movement is currently around 4450 points in the S&P 500, so another 4 - 5% above the current level. This boundary increases by around 1 - 2% per half-year thanks to the rising trend channel. When this potential is exhausted, we should at least see a pause in the movement and strong attempts to move both downward and upward. We should both expect and welcome a strong pullback later in the year. It clears the air like a strong rain and makes room for new things. In the longer term, however, there is no reason why we cannot see another 30 - 40% performance in the markets.

A major theme in the first half of the year was the possible shift from Growth to Value. Lately it has become very quiet about this topic after it was on everyone's lips in the first quarter. For good reason: In our market commentary from May 10th, we pointed out how far the path to a real Value market is in reality despite all the euphoria and good approaches. Since then, the sector tried once more but was unable to build momentum on the whole and had to admit defeat for now.

This makes a complete rotation breakthrough unlikely. If an end to the Growth regime is emerging, it will now change more slowly with a multi-year base formation. In this sense, we wish you a wonderful summer and good Corona-free health.

The Leeway Team