Which Mag Seven Stocks Should You Own?

The market is projected to reach new highs by year-end, supported by favorable multi-year cycles and the historical bullish bias of 'years ending in five' like 2025, which is expected to mitigate typical September weakness. Analysis of the Magnificent Seven stocks reveals significant divergence: NVIDIA, Meta, and Amazon are positioned for continued strength or strategic entry points, while Alphabet and Microsoft may see mixed performance or underperformance relative to peers. Conversely, Tesla and Apple are identified as laggards, with recommendations to underweight or sell Apple due to declining relative strength and unfavorable cyclical patterns.

Analysis

A broad market analysis suggests a high probability of closing the year at new highs, supported by a convergence of bullish technical and historical indicators. Specifically, the dynamic monthly cycle and a composite of the one-, four-, and ten-year cycles are all projected to rise into the fourth quarter. This is further reinforced by the historical 'decennial pattern,' which identifies years ending in five as having the best returns since 1885, a factor expected to mitigate traditional autumn weakness. However, within the Magnificent Seven, performance is highly divergent. A proprietary relative strength screen (benchmarked against the NASDAQ Composite at 97.5) identifies clear leaders and laggards. NVIDIA (109.5), Meta (104.6), and Alphabet (103.4) show the strongest relative performance. Amazon is poised to outperform due to a powerful combination of strong seasonality and a rising monthly cycle. In contrast, Tesla (96.1) and Apple (94.0) are lagging the benchmark. Apple, in particular, faces significant headwinds with declining relative strength, a historically weak September, and a monthly cycle that has peaked and is projected to fall into year-end. NVIDIA, despite its top rank, is expected to see a cyclical low in September, presenting a potential entry point. Alphabet and Microsoft present a mixed outlook, with expectations of modest gains but potential underperformance relative to the group's leaders.

Key Decisions for Investors

• Consider adding to positions in Amazon, which exhibits the most favorable combination of positive seasonality and a rising monthly cycle, suggesting strong performance into year-end.