Weekly update
> The S&P 500 experienced a second week of retracement, closing with a decline of -0.8%. The index found support on an ascending trendline before partially recovering towards the end of the week. The market appeared overheated, with a significant gap from the weekly EMA20 and entry into overbought territory, as indicated by both daily and weekly RSI readings. It remains to be seen whether the recent correction, which amounts to just over 3% from the highs, will suffice to attract buyers back into the market or if a larger move, potentially towards the support area around 5,250-5,300 points, will be necessary.
> In detail, the recent bearish movement in the market has been primarily driven by large-cap stocks, which had surged earlier in the year due to enthusiasm around AI. Conversely, in a typical thematic rotation, small-cap and value stocks have shown positive performance.
> $TSLA (Tesla Motors, Inc.) , down -8.1% for the week, has been under scrutiny after a significant drop in its Q2 2024 earnings, which declined by 43%, missing market forecasts. The company is facing increasing competition from BYD, a Chinese automaker that has outpaced Tesla in terms of vehicle sales. BYD has achieved this success through an aggressive price-cutting strategy, doubling the number of cars sold compared to Tesla.
> $GOOG (Alphabet) , down -6.0%, also ranked among the worst performers despite reporting positive earnings, with both earnings and revenue surpassing consensus estimates. The company's internet search advertising business and cloud computing unit performed well, but YouTube's results fell short of expectations. Investors have been particularly concerned with the company's operating expenses and profit margins, as capital expenditures have surged amid significant investments in artificial intelligence.
> This week, the first reading of the Q2 2024 GDP indicated a growth of 2.8%, which exceeded expectations. Consumer spending, which had shown some concerning signs in recent months, demonstrated solid growth, contrary to previous apprehensions. This robust consumer activity has been a key driver in the overall economic performance, highlighting the resilience of consumer demand.
> The portfolio ended the week with a loss of .0.5%, outperforming the broader market despite a significant drop in shares of $LW (Lamb Weston Holdings Inc) (-26.8%) following their quarterly earnings report. The company reported a 5% decline in net sales. According to the CEO, the results were impacted by weaker-than-expected price/mix outcomes, market share losses, and a slowdown in restaurant traffic both in the U.S. and several key international markets. This unexpected underperformance contributed to the negative impact on the portfolio's overall performance for the week.
> The recent reduction in investments in the technology sector, which is currently significantly underweighted in the portfolio, has contributed positively to the weekly overall performance, helping it to outperform the broader market. This strategic decision minimized exposure to the recent volatility and downturn in tech stocks, which were hit by concerns over valuation and market rotation away from high-growth sectors. ... Show More
