Not to Get Technical, But Let’s Get Technical

One of the more interesting points about investing is the myriad of ways one can go about putting capital into risk assets. Among other options, there are actively managed and passive vehicles; there are highly-concentrated and broadly-diversified strategies; and there are fundamentally and quantitatively driven portfolios. There is also the use of technical analysis when considering what securities, sectors or asset classes to invest in and when. It is this approach – or at least one datapoint that ties back to technical analysis, and what it might mean for the ongoing bull market – that is the focus of this Weekly Wire.

But before we speak to that point, we would note Orion believes dynamic, diversified, multi-asset class portfolios (that are both actively managed and incorporate active and passive vehicles) are the most prudent way to allocate capital, and the best means of ensuring a favorable investor outcome. With that written, technical analysis – at a high level – is an attempt to discern the direction of a security, sector or broad market based on factors that could include recent performance, trading volume and price relative to a moving average. Well, it turns out 91% of the stocks that make up the S&P 500 are trading above their respective 200-day moving average (the highest since 1971).

This datapoint indicates the ongoing move higher by the market is both broad based and has meaningful momentum to it. And if history is any guide, a bull market top for the S&P 500 does not present itself when so many of the stocks that make up the index are biased higher. We remain constructive on US equities.