The Economy No Longer Stinks - But Stocks Have Already Sprinted Ahead

D.M. Martins Research 21.39K Followers Follow Summary Stocks, led by the S&P 500 and Nasdaq 100, have surged on renewed institutional risk appetite, with high-beta names outperforming. My proprietary 'Smells Funny Index' signals economic weakness is bottoming, as durable goods and capex show marked improvement. Despite improved fundamentals, equity valuations—especially high-beta stocks—appear to have already priced in much of the economic turn. Current rally is sector-agnostic, driven more by risk appetite than specific tech or cyclical sector strength. Vladislav Novitskiy/iStock via Getty Images Following a Q2 that marked the best quarterly performance in the S&P 500 ( SPY ) since 2020, stocks keep marching higher and higher. The broad market index, up about 22% over the past year, has already climbed 6% since only This article was written by D.M. Martins Research 21.39K Followers Follow Daniel Martins is the founder of independent research firm DM Martins Research. The firm's work is centered around building more efficient, easily replicable portfolios that are properly risk-balanced for growth with less downside risk. His work has been featured on Seeking Alpha and other platforms through 2,000+ articles, and it has been cited by the New York Times, CNN, Reuters, USA Today, and others.- - -Daniel is the founder and portfolio manager at DM Martins Capital Management LLC, a macro strategy hedge fund (leveraged risk-parity approach that uses return stacking to achieve aggressive long-term capital appreciation). He is a former equity research professional at FBR Capital Markets and Telsey Advisory in New York City and finance analyst at macro hedge fund Bridgewater Associates, where he developed most of his investment management skills earlier in his career. Daniel is also an equity research and global equities market instructor for Wall Street Prep, where he has developed content and trained hundreds of senior and junior analysts at some of the largest bulge bracket investment banks and sovereign investment funds in the world.He holds an MBA in Financial Instruments and Markets from New York University's Stern School of Business.- - -On Seeking Alpha, DM Martins Research has partnered with EPB Macro Research and collaborated with Risk Research, Inc. Analyst’s Disclosure: I/we have a beneficial long position in the shares of SPY, BTAL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.