Market breadth is starting to widen out
Despite defensive macro positioning, tactical opportunities are emerging as market participation expands beyond mega-cap tech into lagging sectors.
The argument
Mike Preston noted that New Harbor recently increased their equity exposure slightly to 50% by adding regional banks, observing that small caps, biotech, homebuilders, and REITs are starting to show signs of breaking out.
The thesis, stress-tested
✓ What validates it
- ✓Continued outperformance of small-cap and regional bank indexes relative to the S&P 500
- ✓Sustained breakouts in homebuilder and REIT sectors
▸ Risks discussed
- ▸Whippy and mixed technical signals could lead to false breakouts
- ▸Broad market downturns could drag down newly participating sectors
Hear it yourself
"Because of those top 10 stocks that are actually even more than top 10 now, but that that concentration of tech in there. If something goes wrong there, it's very easy for them to have a huge big wipeout. Like, go look at the Mag seven and go look at the history of the of those stocks and look at how many times they've had 50% corrections. Mhmm. It it's high. Like, these these are very volatile stocks. So we have this situation where these the highest concentrated stocks in the index are those that are very prone to having 50% corrections."
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