Advisor Insights Market Commentary Market News

Insights on the Rally

Written by: Trek Investment Committee

The equity markets have experienced a notable rally since October 2023, with the S&P 500 index rising approximately 25 percent.1 This surge has led some investors to question whether the rally might be overextended and if a market correction could be on the horizon.

Chart: S&P 500 Performance October 27, 2023-Source: Yahoo Finance

Market rallies are often driven by positive investor sentiment. When investors are optimistic about the future, they tend to increase their equity investments. This can sometimes lead to a herd mentality, where the fear of missing out (FOMO) drives further buying, potentially inflating prices. It can be challenging to distinguish between rational optimism based on improved economic or market conditions and moments driven by herd behavior.

To understand what’s happening in the market right now, it’s helpful to look at some insights through data. For example, recent data from Ned Davis Research (NDR) shows that about 72% of stocks are doing better than their average performance over the last 200 days. In the past, when more than 60% of stocks were doing this well, it typically meant the market was going to keep doing well, at least for a little while. (see chart below) However, remember that this doesn’t mean we can ever be sure of what is to come next, or that the market won’t have ups and downs – as always, past performance is never a guarantee of future results.

Source: Ned Davis Research (NDR)

For investors contemplating whether to participate in the current rally, it’s very important to consider individual risk tolerance, investment time horizon, and financial goals. While market trends can provide some insight into potential future movements, they are inherently uncertain and subject to rapid changes based on new information or shifts in investor sentiment.


Investment Advisory Services offered through Trek Financial LLC., an (SEC) Registered Investment Advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. Trek 24-184

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