Are we out of the woods? Possibly. Yet a closer look under the hood market is causing some investors to do a double-take.

Just seven companies (and eight stocks) have accounted for more than the S&P 500’s total 9.65% return (price gains and reinvested dividends) across the first five months of 2023. These seven firms are making equities look hot again and, going the way they’re going, the market to deliver a handsome annualized gain of at least 23%.

Take those seven out of the equation, and the S&P is actually down slightly for the opening five months of the year. It’s what veteran markets reporter Alan Sloane calls the “skinny bull” – a tightly-concentrated burst of growth shooting up through an otherwise lackluster market.

This market is no muscle-bound stud, but can it keep charging? “I believe the skinny bull has legs, for now,” Yohance Harrison, BFA, CRPC, and founder of Money Script Wealth.

Hold on ‘Buckeroo

“The latest disaster we avoided was the debt ceiling. Since its resolution, there hasn’t been a real emotional headline to spook investors. Unless a new catalyst emerges, it could be smooth sailing for a little while.”

History shows the Nasdaq’s can quickly turn from gain to pain and fall right through the floor. This drop tower effect can send portfolios into a stomach-clinching free fall. This can spook investors who don’t know the best ways to respond to a stock market crash.

Crash Landing?

“From March 2000 to January 2003, the Nasdaq had 11 head fakes with rallies as high as 49%,” Amar Shah, CFA CIO of Client First Capital. “At the end of those three years, the Nasdaq was down close to 78%.”

“Long-term investing is like climbing a mountain. Steep inclines take your breath away. Switchbacks seem to stretch forever. Obstacles block your path. Valleys are disorienting,” Kevin Estes, Financial Planner and Founder of Scaled Finance.

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