Evercore ISI's Julian Emanuel wrote that market momentum can continue despite the latest Fed news.But he also warns investors to watch for 5 signs that momentum is fading.At least that's what analysts at Evercore ISI believe. In a note to clients published in late May, a team led by senior managing director Julian Emanuel pointed out that today's market looks oddly similar to the market of the late 1990's.
Fast-forward to 2023. While volatility is down this year, narrow market breadth has returned as a small group of Big Tech stocksAs a result, the Nasdaq 100 has risen over 38% year-to-date, more than doubling the S&P 500's 14% gain this year. Luckily, Emanuel and his team at Evercore have outlined exactly what to watch for, and where investors should be putting their money today.Fed's pause on interest rate hikes earlier this week
So how exactly will investors know when the market has finally run out of steam? Emanuel noted five signs that the momentum market is nearing its end., or a lack of fear in markets. Emanuel measures this with the CBOE Volatility Index, or VIX, and wrote that if the VIX falls lower than 11 it's a problem. As of June 15, the VIX stands at just over 14.. Emanuel uses the American Association of Individual Investors Bulls Index to determine whether or not the market is overly bullish.
Emanuel found these so-called"momentum masters" stocks by screening Russell 1000 stocks for"medium and near-term momentum leaders," as measured by both year-to-date performance and performance since April 30 that puts these picks in the top 20% of the Russell 1000 index.
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