Is the Market poised for a come back?

About a month ago we saw a massive drop in the market, mainly the NASDAQ. In the space of 2 weeks it dropped from comfortably above 20,000 to below 18,000. Many investors would have gotten scared out of their stocks and sold at that point. But over the last couple of weeks the market has recovered most of the those losses. It makes you wonder if the tech trade is back. Is the market ready to broaden out, or is it still going to remain concentrated in the 'Magnificent Seven'?

In my own portfolio I have had nice runs in Lockheed Martin and Reality Income, and from what I hear, the other Real Estate and Industrial stocks have also been doing well. As the interest rates have been coming down, dividend stocks are starting to look more appealing. On the other hand, I also own Microsoft, which has come back down to earth. Stocks like SMCI have done terribly, down 60-70% from their highs. Tech has been getting hammered across the board. The simple way to show this, is to compare the old company Dow Jones Index to the new (ish) company NASDAQ. Nvidia has gone from $135 to near $100.

But it hasn't just been tech that has been getting hammered, commodity stocks have also been getting hit. The Aussie resource index has gone down about 10% over this year. So while the Aussie interest rates have also been coming down this has not helped the resource stocks. Usually high or low commodity prices are a reflection of the global economy. And the global economy has been looking weaker, due to property struggles in China and debt issues in the Euro zone.

It has often been said though, that volatility is par for the course with stocks. Indeed, it is the price you often pay for long term gains. Any long term investor in Amazon would be able to tell you this. Often the market will see a lift in a US election year, especially once the choice in the next President becomes clear. I do think that while we may be in for a tough month, once we get nearer to the election, things will get better. Its always never a bad idea to have some cash on hand. And I will be adding to my index holdings at the end of the month.