The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
As usual
Bulls went to work in a gentle and consistent manner. Futures traded up some overnight and in the early hours. The S&P 500 opened about +30 and marched further upward over the day. News didn’t produce any sharp reactions in stocks and other markets didn’t do much to inspire/dissuade. The yield curve moved small. Crude twisted trivially. The Dollar was about as flat as it could be. Precious metals did catch a bid, as did Bitcoin. All in all though, there was little to note of today’s price action and newswires. The only thing that stands out is that the equity bull market quietly resumed its ascent.
Megacap tech led the market and, considering the absence of news, it appears that investors went back to what they know, which has been so lucrative. The Mag 7 gained, except for Microsoft, and the Nasdaq 100 significantly outperformed the S&P. This is similar to last week although today’s performance spread is not as great.
Whether we are experiencing seasonal flows into the stock market, spearheaded by megacap tech, or whether we’re just seeing a renewed excitement for megacap tech, I can’t say. If forced to guess, I’d say the former.
The middle of the summer tends to be a quiet period. Trends tend to calmly progress. Certainly we could see a long stretch of range-bound price action, or even a bearish stretch, but I doubt it. The market has bullish expectations for the fundamentals of companies. It has been reluctant to return to the frenzied price-chasing of April and May. Part of this is due to the perception that the easy gains were already made. Part of this is due to the worry of yet another US/Iran curveball that might be around the corner.
While a US/Iran setback is possible, I think the market considers it unlikely. That said, June showed that any surprises can happen frequently enough to derail a positive fundamental outlook. I think markets are just taking their time getting their sentiment shifted back into a strongly optimistic state. They are dipping their toes as headlines cooperate.
Until we really breakout, perhaps with the help positive news, I think bulls are gonna bull, but quietly.
See you tomorrow.
-Mike
Visdom Market Commentary
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