The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
AI again
The sentiment of US equity markets is approaching euphoria. Futures traded slightly higher overnight but the real upside began with regular hours trading. Nvidia led the index higher, with help from Broadcom and Cisco. Other megacaps did their part too. The breadth was better this session, with a 3:2 ratio of advancers to decliners. The yield curve wasn’t a factor in the equity rally. It flattened slightly. Crude wasn’t a helpful bullish force either. Prices climbed a bit in the front. US/Iran headlines were light and macroeconomic data didn’t shake up trading either. Today appears to be a rally that initiated itself for internal, and unclear, reasons. AI enthusiasm and AI spending were common stories driving individual stocks however and the broader excitement for US stocks almost certainly finds its source within the AI narrative.
The bullish power of the AI story is returning to the market. After fading from center stage this year, perhaps because of the US/Iran conflict, it re-steps into the spotlight. US equity investors are happy to push prices higher in the name of the AI transformation.
Investors return to old AI plays like Nvidia, which set a new all-time high today. Investors are also searching for new names which can benefit from the AI story, like CSCO an MU. There are many others of course but the larger point is simply that the market hasn’t just opened the old AI playbook. It is using the old plays and coming up with new ones. Anything and everything AI, both old and new, forms a broad investing theme that is pushing the market ever higher.
Upward momentum is happening. Overbought technicals are flashing. Sentiment is frothy. Dip-buyers are waiting and the ones that have lost their patience are now chasing offers higher.
Will this rally end with a digestion or a sharp pullback? Everyone is asking the question and nobody has a good answer.
See you tomorrow.
-Mike
Visdom Market Commentary
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
