The S&P 500 recorded its strongest month-to-month achieve since November 2020, rallying 9.1% throughout a risky interval that ended with a bang. Progress shares outperformed, with Shopper Discretionary (XLY) and Know-how (XLK) shares main the way in which. It was not a very simple interval to navigate, nevertheless, as buyers digested information of inflation hitting a 40-year excessive amid blended financial information that sparked debates surrounding the Fed’s potential response.
Information this previous week appeared to strike the proper chord, with a decline in 2nd quarter GDP signaling a slowdown within the financial system, which might result in much less aggressive Fed motion and a slowing of their fee hikes later within the 12 months. Earnings season additionally supplied a lift, as deeply oversold shares rallied after reporting outcomes that weren’t at all times stellar. I wrote about this risk, and highlighted Amazon (AMZN), in an article 2 weeks in the past, which could be accessed right here.
Inside July’s top-performing Know-how sector, Renewable Vitality was the large outperformer with a 40% rally on the heels of a big achieve in Photo voltaic shares final week. The group seems to have additional upside following final week’s introduced Inflation Discount Act. The invoice will characterize the largest local weather funding in U.S. historical past. One other vital driver for this group has been constructive earnings experiences.
DAILY CHART OF INVESCO SOLAR ETF (TAN)
Subscribers to my MEM Edge Report had been alerted to a constructive shift on this group, in addition to a purchase suggestion for one of many high performers, in my July tenth report.
The curiosity in shares from this group has been pushed by the continued uptick within the worth of oil, which has sparked a requirement for various vitality sources. Russia’s discount of fuel provides is one other issue, notably inside Europe.
Enphase (ENPH) from my MEM Edge Report, is the most important producer of converters that flip solar-based electrical energy into usable vitality. The corporate reported quarterly earnings final week that had been 100% greater than final 12 months, with administration guiding progress prospects greater nicely into subsequent 12 months.
DAILY CHART OF ENPHASE ENERGY INC. (ENPH)
The potential passage of the Inflation Discount Act spurred the inventory greater as nicely.
Whereas Different Vitality shares are on the transfer greater, different rotation can also be going down, with Vitality, Utility and REIT shares far outpacing the markets final week amid robust earnings outcomes. Different dynamics are additionally at play for these teams and, for individuals who’d like insights into why you need to be in these teams, in addition to which shares will profit probably the most, take a 4-week trial of my twice weekly MEM Edge Report for a nominal charge.
My MEM Edge Report had a 75% success fee in 2021 with losses not exceeding 3%. Take a trial now utilizing the hyperlink above!
On this week’s version of The MEM Edge, now out there to observe on demand at StockChartsTV.com and the StockCharts YouTube channel, I clarify why the markets are poised to commerce greater and how one can take part. I additionally discus the rotation into newer areas which have greater upside from right here.
Warmly,
Mary Ellen McGonagle, MEM Funding Analysis
Mary Ellen McGonagle is knowledgeable investing guide and the president of MEM Funding Analysis. After eight years of engaged on Wall Road, Ms. McGonagle left to turn into a talented inventory analyst, working with William O’Neill in figuring out wholesome shares with potential to take off. She has labored with purchasers that span the globe, together with huge names like Constancy Asset Administration, Morgan Stanley, Merrill Lynch and Oppenheimer.
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