The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Micro drama.
Overseas markets fell and the risk-off sentiment was notable in the premarket. Descent CPI data tamped down the worry for a bit and futures jumped up, as did bonds. The S&P opened about flat and bounced around with some quick and significant swings for an hour. The tape calmed down and climbed upward, printing intraday highs around noon, about +50 points. It sure looked like the bulls had spoken and the session would be a bullish one. That wasn’t to be. The market faded slowly and gave up all the midday gains by the final hour. We closed about flat. Yields dropped across the curve and capital flow was marginally higher at 113%.
The AI scare trade continues to get attention. It’s mostly a conversation about what the next disruption due to AI might be. The worry is real but it isn’t leading to fearful cascades in prices. It’s more of a topic in motion. Investors are asking each other what group will be the next casualty of AI and if a particular story gets attention, the prices reflect it. The story then moves along and the market seeks out the next group. It’s like a gossip circle among investors about who will catch the AI cooties next.
I’m not too worried about the bearish power of this type of worrying-out-loud. It’s a big traveling conversation that circles around what-ifs. Even after a stock or an industry takes a hit because of a public what-if AI scare… it doesn’t gather downward momentum.
If AI scares do create downside momentum, then it will be worrisome. Right now, it looks like something that is shaking our nervous longs and testing the mettle of dip buyers.
What a week. New highs seemed imminent on Monday and bad housing data and the AI scare trade said “not so fast.”
I still think the longs have the advantage. Perhaps a 3-day weekend will settle nerves and bring out the buyers.
Have a great long weekend, see you Tuesday.
-Mike
Visdom Market Commentary
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