The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Breather.
Overnight was blah, news was blah, data was blah. The S&P 500 opened up about 10 points and spent the bulk of the day in the +/- 10 point range. The market doesn’t want to continue the rally (just yet) and doesn’t want to take some recent gains back (just yet). The index treaded water although tech continued its own rally. Yields climbed again, something that will matter at some point, and Fed cuts for the year are now down to 49 bips.
Without a major catalyst to spur stocks into a direction, we’re left digesting existing sentiment. That sentiment was frantically bullish and now it has to come back to earth. It doesn’t require a selloff but it does require time. Is today’s session all the time that is needed? I’m not sure but it feels like everyone has agreed with each other that we are going up and that the snoozers will be losers.
Sidelined capital may now be in a hold-your-nose-and-buy circumstance. It was on the sideline, waiting for the bounce to fail, but now that the bounce is extending, and it is going to reluctantly chase the tape higher until we’re back at the old highs. I don’t believe new highs in a month or so is *destiny* but without a calamity, it sure feels like it.
The tariff talk is no longer a risk. The sentiment no longer expresses any fear nor doubt but it also isn’t wildly optimistic yet… and the pendulum is almost assured to swing toward the extreme given where we were.
Look at this chart. Who sees this chart and doesn’t think the bottom is in? Who doesn’t go long now after having missed the bounce but not wanting to miss the rest?
At this point, I think it’s just a handful of stubborn investors but they’re not in charge of the tape so whether they are right, wrong, or somewhere in between, it doesn’t matter.
See you tomorrow.
-Mike
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