The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Slow build
Headlines remained benign and the urge to dip-buy grew during our session. Futures were quiet and about flat overnight. The S&P opened up small, maybe up a few points. The S&P rallied consistently throughout the day. By lunch it was up about 50 points. Over the afternoon we very calmly drifted up a bit more. The yield curve climbed some but that didn’t bother stocks. Crude didn’t matter much, those prices came in fractionally. Precious metals were mixed and Bitcoin was sold. A global, broad-market theme is lacking from today’s action. Individual markets did their own thing today with no typical linkages.
Like yesterday, tech and the prior vanguard led the way. The Mag 8 were very strong and today’s NDX performance doubled today’s SPX performance. This is reminiscent of the good old days of the rip-roaring rallies. Considering that today was both month-end and quarter-end, one could rightly argue that seasonal investment flows are at work. The old playbooks aren’t broken, just out of favor, and significant waves of capital are simply at work re-embracing the names and narratives that were so rewarding in the not-too-distant past.
If this is what’s happening, there might be further continuation as we start the new month and quarter. Considering that Friday is a market holiday, that continuation could take us into the weekend.
I think that’s a good bet. The chart, which is as important as any macro factor, looks like it’s on the mend and heading towards new all-time highs. As long as geopolitical headlines stay out of the way, everyone sees the same thing and everyone is going to turn the perception into reality.
Here’s the chart of the S&P over the last 12 months. You don’t need to overthink things. What direction are things going?
The big picture verdict is clear. It’s a bull market and we’re going up. The short-term picture is also pretty clear. We digested the run-up and we’ve just bounced.
Of course there are counterarguments and alternate chart-readings that one could make.
However the vast majority of investors see it the obvious way. And they have the capital and conviction to make it happen.
See you tomorrow.
-Mike
Visdom Market Commentary
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