Craig Johnson: Market Strength, Tech Leadership, and Buying Dips

Earnings Season Performance

• 💡 Earnings season is not as negative as many strategists had predicted, with many companies reporting constructive results.
• 📈 Charts are seen as a leading indicator for the market, and current price action is being supported by these earnings reports.

Market Leadership and Broadening

• 🚀 The primary market focus remains on tech and AI-related companies, which have shown consistent strength over the past 12 months.
• 📊 Despite the tech focus, the market is showing signs of broadening out, with over 50% of tracked stocks in an uptrend and supportive breadth measures.
• ⚠️ A potential concern is the lack of new highs in some industry groups, which could temper market enthusiasm if it persists.

Investment Strategy and Outlook

• 🎯 The strategy recommended is to buy the dips rather than sell rallies, especially given elevated cash levels in money market funds.
• 💰 Investor sentiment is characterized by FOMO (fear of missing out), suggesting a strong appetite for buying pullbacks.
• 🗓️ Seasonal weakness in August and September is expected to be offset by investor demand for buying opportunities.
• 🚀 The year-end objective for 2026 is set optimistically at 6,600, indicating an expectation of continued upside.

Attractive Sectors and Stocks

• 💻 Technology, industrials, and financials are identified as the most attractive sectors currently.
• 🏦 Specific stock mentions include Bank of America and Oshkosh (OSK), with a note on constructive charts for small-cap stocks.
• 🏠 A notable observation is the emerging strength in housing stocks (e.g., LGI Homes, D.R. Horton, IBP), which is seen as a bullish sign for the broader market.