If last month’s word was resilience, this month I think another word comes to mind: participation.
After spending much of the summer moving sideways, the S&P 500 has broken out of that range and has continued what I would describe as a “stairstep” higher—advance, pause, consolidate…then move higher again. In fact, the S&P recently recorded its 27th new all-time closing high of the year.
But here’s what I find even more encouraging: more areas of the market are participating.
Remember my soldiers and generals analogy from last month? The soldiers continue to move forward, and now the generals are moving with them. Smaller company stocks have actually been leading so far this year, while more stocks across the broader market have been participating in the rally. Think of it like a team where you’re no longer relying on just two or three star players to win the game. In other words, when more of the team is contributing, that’s generally a healthier sign.
There’s another old Wall Street saying that seems appropriate right now: “Don’t fight the Fed.”
What does that mean? Think of the Federal Reserve as controlling one of those old-school Atari joysticks – except this one affects the economy. When they’re aggressively raising interest rates, they’re intentionally trying to slow things down. Think of it like “tapping the brakes”. Today, rates are holding steady and recent inflation data have been more encouraging. In other words, the Fed isn’t currently pushing as hard against the economy and markets as it has at other points in this cycle.
Even the VIX, commonly referred to as the market’s “fear gauge,” seems to be enjoying a bit of a summer slumber, as of this writing, August 17th, it’s still hovering around 15, with anything below 20 generally considered low volatility. Generally, the lower the VIX, the calmer investors are feeling—and right now, it certainly isn’t signaling much fear.
So, does all of this mean we can put our feet up and enjoy the rest of summer?
Not quite.
We’re still in a midterm election year, which can bring uncertainty as we get closer to November. And September is historically the weakest month of the year for stocks. So, it wouldn’t surprise me if we experienced a few bumps along the way.
But here’s what matters most to me: our tactical strategies remain risk-on, meaning they’re participating in the market because that’s what the data currently tells our managers to do. If conditions change, they have the ability to change with them.
For now, the trend remains positive, more of the market is participating, and volatility remains relatively quiet. It reminds me of that old Wall Street saying, “The trend is your friend.“ At least for now, the trend continues to be our friend.
Of course, that can change, which is exactly why we have tactical managers in the first place. If the data changes, they have the ability to change with it. Until then, we’ll let the managers manage and respond to whatever the markets give us.
1Source: Market data and milestone tracking courtesy of The Wall Street Journal (Live Coverage, August 14, 2026) and Yahoo Finance Markets.
