The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
The bull is back?
Futures climbed small overnight but ramped up significantly in the 90 minutes before the open. The index opened about +60 and chopped around that level until 10:30 AM, at which point investors pushed prices higher. We spent the bulk of the session trading +60 to +75, fading a bit into the close. Treasury yields were a bit higher on the front of the curve and capital flow was slightly elevated at 112%.
It was a fairly quiet news day but bullish investors showed up during the session and grew stronger from the late morning on. This was the common intraday pattern of 2024 so perhaps investors are starting to go back to their tried-and-true playbook. December and January have been characterized by a reluctance to resume the long-term trend of stocks. The inflation news this week, the dovish Fed communications, the positive earnings results, and the rosy guidance have changed the investment landscape.
Some investors are still reluctant to buy but many just jumped in. Whether they are succumbing to FOMO or whether they are reacting to the news and data this week is debatable.
The point is that the market, on balance, was on the fence with respect to continuing the bullish trend or not. Then the news and data this week gave the market the all-clear signal… but only *some* of the market is responding to it. Some investors are still holding on to their reluctance. Maybe they will only join the party when we print new all-time highs.
So be it. I think they’ll be late to the party. They’re not leaving too much on the table to be honest but still, why were they so willing to buy-the-dip in ’23 and ’24 yet are so hesitant now?
Maybe we’ll get an answer… or not… but I think there’s a high probability that we’re starting a new leg higher in the bull market.
Monday is a holiday so I’ll see you Tuesday.
Have a great weekend.
-Mike
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