The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Unmotivated
Despite drama in Asian equity markets, both Europe and America traded calmly. The S&P opened down about 40 points but recovered to flat quickly and spent the session circling the unch’d level. Treasury yields came in a bit. Crude came in modestly on the front, climbing small 6-plus years out. Precious metals finally caught a bid while Bitcoin was essentially flat. Headlines weren’t very compelling although the US/Iran situation took a few turns intraday. It was surprising that markets basically ignored both the bad and good headlines.
Today’s big picture is that markets had no motivation. News was minor so that could explain things. Whatever technical influences that might be in effect, didn’t matter either. For the S&P, we are very close to the 50-day moving average and so there’s *some* kind of technical battle in progess here. However, the battle is quiet so far. It appears that investors aren’t considering that line a pivotal one.
If we think that US stocks are simply digesting/consolidating/waiting, we continue to have a case. It’s not a terribly strong one but it’s there. The obvious takeaway from looking at the S&P over the last year is that the blistering upside momentum from April through May is over. We have trimmed price back to early/mid-May levels this month. The bears have not triggered downside momentum either. If there is going to be a fresh trend, with material magnitude, it doesn’t seem to be spontaneously happening.
By this I mean that the market isn’t resuming upside momentum after taking a healthy pause. The market is also not selling hard to undo the previous excess. The market appears to need a news-based catalyst to go somewhere.
What might that catalyst be? I’m not sure. I thought that yields or macro data or crude could be the answer. So far, not so.
Until we get a material news item or macro datapoint, I think investors just don’t have the passion to push prices significantly.
See you Monday, have a great weekend.
-Mike
Visdom Market Commentary
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