Mike Akins, co-founder of ETF Action, suggests that overlooked market areas may experience significant growth in the second half of the year. He emphasizes the potential of software and cloud computing companies, which have seen declines from their previous high valuations but still possess strong growth prospects.
Akins points out that these sectors are essential for daily operations, reinforcing their relevance. He also highlights the 'Magnificent Seven' index, which includes major tech firms like Nvidia and Microsoft, noting its underperformance compared to the Nasdaq-100 in the first half of the year.
Despite being flat year-to-date, the Magnificent Seven has begun to rebound, gaining 5% in early July while the Nasdaq-100 has dipped 1%.
Akins believes that small and mid-cap stocks, particularly those in the Russell 2000 index, which is up nearly 20% this year, will continue to perform well due to improving earnings and revenue growth, as well as a potential expansion of their depressed valuations. Overall, Akins sees a favorable setup for these underperforming sectors as they catch up with their larger counterparts