The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Start the year.
Trading kicked off with futures rallying strongly and the S&P 500 opening about +40 points. The index rose and fell during the morning and went negative around 12:30 PM. There were no headlines to point to but the Mag 7 were weighing on the broader market already and when the index went negative, it looks like quick pile-on ensued. The index bottomed when it was -50 points and recovered some in the final two hours. Capital flow returned to typical levels, printing 102% today. Treasuries didn’t change much.
2025 is off to a forgettable start. The S&P closed down for the final 4 sessions of 2024 and today looked like a lick-your-chops dip for the bulls. That’s how the day began but there was no follow through, which is unusual for the last two years but normal in the last few weeks.
Economic data hasn’t surprised and headlines haven’t moved markets. We’re playing technical games, arguably since early December. Today’s weakness makes the 100-day moving average a key short-term level (5798). If we break that, the bears may emerge in force and gun for the 200-day (5555).
That would certainly rattle some people. We’re 4% off the highs right now. How would the markets react if we were 9% off? Over the last two years, that peak-to-trough drop attracted the dip-buyers with a vengeance and the S&P ripped higher with speed and consistency.
We’re left to ask how things might play out in 2025. The playbook is known. Buy buy buy when the S&P is off 9% from the highs. Buy buy buy when the S&P goes below the 200-day moving average.
What about when both those things happen together? Of course the playbook says buy buy buy. You know it, I know it, they know it.
But will the market go and do it or get cold feet?
In the absence of news, the market will do it. What if it happens in the midst of negative news though?
There’s no pending data or event that looks likely to sour things. The data has been well-behaved for a while. Where does that leave us then?
Technical limbo it seems.
See you tomorrow.
-Mike
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.
