The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Getting the groove back
News wasn’t a material driver of action today. This despite new negative developments between US and Iran. Markets went about their business seemingly inoculated from the newswires. Yields dropped across the curve, helped midday by strong demand in the 30-year auction. Crude also fell, stunning many in light of the ongoing military actions. Stocks climbed along with precious metals and Bitcoin. It was a day completely in line with a peace-is-coming theme, except that peace doesn’t seem to be coming according to headlines. The NASDAQ-100 led US stocks higher as old favorites resumed their upward trends. Chipmakers are the darlings of the longs again.
It is difficult to identify *why* investors pushed yields down and crude down and stocks up and precious metals up. A smoking gun catalyst is absent. For US stocks, we can only note that the market acted steadfastly bullish.
Chart-watchers are probably not surprised. The true test will happen at the prior highs, 7620, but patterns indicate that test is imminent. Downside tests over the past weeks resulted in bounces and now it sure looks like we’re heading for an upside breakout.
Earning-swatchers are probably not surprised. The estimates climbed all year and there have been no corporate reveals to dissuade analysts from projecting higher expectations. The proof in the pudding will be revealed in the coming earnings season but until then, expectations are leading price.
Sentiment-watchers are probably not surprised. After brushing off numerous US/Iran setbacks and then unwelcome hawkish communications from the Fed, stocks continue to work higher. While the stock market mood is a bit balanced currently, it is notably more optimistic today, than in the prior weeks. The pendulum of sentiment is swinging positively and there appears to be much more room to swing.
Will markets self-sustain their bullish inclinations? I think so. They will need assists from headlines here and there but it sure looks like they are in-motion with, or without, daily news support.
See you tomorrow.
-Mike
Visdom Market Commentary
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