Watch the CPK Market Action Report: August 2023

The stock market rallied to new 2023 highs in the last week of July. Will the traditional August-September sell-off in equities repeat again this year or will the strong earnings further embolden markets in the second half of the year?

Watch the Market Action Report now:

Market Action Report

August 2023


The stock market rallied to new 2023 highs in the last week of July. Will the traditional August-September sell-off in equities repeat again this year or will the strong earnings further embolden markets in the second half of the year?

That action starts now!


Once again, all the major indices closed higher with the Dow Jones Industrials closing up 3.46% and the S&P 500 up 3.11%. The Nasdaq Composite was up 3.97% as well.


For now, the outlook for stocks remains positive and I continue to think cyclicals, small caps, Value and Equal Weight can continue to close the performance gap with tech. But it’s important to remember that this isn’t a serendipitous rally—it’s been driven by data, and if the data turns more negative, there’s nothing to support stocks, especially at these valuations.


Bonds yields were slightly higher this month. The 5yr settled at 4.17%, the 10yr at 3.95% and the 30yr 4.01%. Meanwhile, the spread between the 10yr and 2yr rose to -.90 bps as it tries to mount a material rally back towards a less-extreme negative reading. Unfortunately, we are a long way from that level as it continues to scream recession.

Treasury yields surged thanks to stronger-than-expected U.S. economic data. That rally in yields, which pressured stocks, served as confirmation that economic data is driving Fed expectations and Treasury yields, and the key for markets is for yields to remain stable. The move last week wasn’t a spike, but it was pretty close, and it pressured stocks.

Looking ahead, a continued rally in yields will be a headwind on stocks. It won’t reverse the entire YTD rally (or even close) but it will be a headwind and could cause a pullback on its own. So, investors will want economic data this week to be Goldilocks to support stocks at these levels.


WTI Crude shot higher for the month closing out at $81.80/bbl.

Fundamentally, the same hot economic data points that weighed on the metals bolstered oil, as resiliency in the U.S. consumer, something the data confirmed, is necessary for the mid-summer oil rally to continue. Going forward, however, we will need to see improvement in the weekly EIA data as recent reports have contained fading demand measures that do not support a move beyond $80/

barrel. That is just a risk to the rally on the back burner right now, but one to keep in mind as the trend in oil does remain higher. WTI remains range bound for 2023 though, with support at $67/barrel and resistance currently being tested between $80 and $83/barrel.

On the charts, copper futures failed for the third time this month at the downtrend line dating back to January, and copper is becoming contained in a tight trading range between $3.95 and $3.81. If yields continue to move higher and the volatility we saw spring up in equities last week both persist, expect copper to rollover and test the lows of the year. Such a development would be a negative on the outlook for risk assets in H2’23.

Gold futures moved higher closing out the month at $1970.50/oz.

Gold came for sale in a big way last Thursday thanks to the robust economic data in the U.S. bolstering the dollar and rekindling worries of higher-for-longer Fed policy. The related surge in Treasury yields also was a notable headwind.

With active-month futures (December) now hovering near $2,000/oz., the uptrend on the continuous chart remains intact, but looking at the history of the December gold contract chart the outlook is more neutral with resistance at $2,020 and support at $1,955/oz. 


The dollar rallied and is now back in the middle of the 100-103 trading range and it should remain there until the BOE or ECB get more dovish (which would boost the dollar) or U.S. growth falters or inflation falls further (which would pressure the dollar).


Economic data was strong last week. In fact, it was a bit too strong as jobless claims dropped to a fresh multi-month low while Q2 GDP and Durable Goods showed solid growth. The result of the data was a sharp pop in Treasury yields, which negatively impacted stocks.

The reason for that is clear. If economic data is too good between now and September, the Fed will hike rates again. That’s not something the market is pricing in right now and it would be a potentially negative surprise.


Although the equity markets were able to eek out another gain for the month, one should note that August and September are historically some of the worst months for stock market performance. So, investors may want to consider waiting for October before making any major moves to capitalize on potential growth opportunities.

Interestingly, there is still a large amount of money sitting on the sideline that will potentially find its way into the market later this year as money managers try to chase returns before year end. While that could potentially push stock to all-time highs, that should not be interpreted as an all-clear signal. Although households are estimated to still have around $500 billion in excess savings, it is likely we will experience a recession in the next 12-18 months. This should not be surprising considering the rise in credit card debt and balances of Home Equity Lines of Credit.

While I think it is more probable than not that we see a very strong 4th quarter performance in equities, we are definitely not in the clear from the possibility of a recession and investors should remain cautious.    


For the month of August, the cash allocation in our equity models remains at 40% due to the model’s more aggressive nature.

Our broad focus has returned to Domestic and International Equities.

As for Domestic Equities, our focus is on Mid Cap Blend and Mid Cap Value and Large Cap Growth with an emphasis in the Technology, Industrial, Basic Material, Non-Consumer Cyclical and Consumer Cyclical sectors.

In International Equities, our focus is on Europe Emerging, Latin America and Europe Developed.


As a reminder, my current allocation is not a recommendation. Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.

If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.

I’m Chad Kunc and that puts a wrap on the August 2023 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.

And that action starts, NOW!