Global markets stayed firm this week while U.S. market breadth weakened. Fewer stocks are driving the rally, so portfolios remain cautious with higher cash levels and tighter risk controls. International and emerging markets outperformed the S&P 500, led by Europe, Japan, and Latin America. Financials and industrials continue to show strength, while gold and other commodities are consolidating after strong gains.
The structural bull market remains intact, but short-term volatility is likely. Tight credit spreads, moderate volatility, and renewed corporate buybacks should help support markets into year-end.
Key Points:
- Market Breadth Weakening:
Fewer stocks are participating in the rally, with only about 45% of NYSE names in uptrends. Weak breadth suggests near-term caution and supports holding higher cash levels. - International Outperformance:
Developed international and emerging markets continue to outperform the S&P 500, led by strength in Europe, Japan, and Latin America. The trend toward non-U.S. leadership remains intact. - Financials and Industrials Lead:
Financials and industrials remain core areas of strength. JPM, MS, ZEB, POW, GE Aerospace, and CAT are maintaining leadership amid broader volatility. - Commodities in Early Bull Phase:
Gold, copper, platinum, and uranium have pulled back slightly but remain in long-term uptrends. Energy producers such as CNQ, SU, and IMO continue to show resilience despite softer oil prices. - Portfolio Tilt Cautious:
Cash levels are around 15% to preserve flexibility. Tech remains underweight at roughly one-third of its market weight, while materials and energy stay overweight. Defensive sectors continue to lag. - Structural Bull Market, Short-Term Volatility:
The broader bull market remains intact, but short-term corrections are likely. Tight credit spreads, moderate volatility, and the resumption of corporate buybacks may provide support into year-end.