The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Keep it going.
The bounce that began on the 13th, continued today. Sentiment is the driver of price as more investors jumped in long after the 3-day weekend. Yields fell small, giving bulls an assist but the heavy lifting is coming from the bullish investors that were sidelined by doubt in December, who think the water is warm again, thanks to last week’s data. Capital flow was elevated today at 112%, an interesting oddity considering the lack of material news and the gain in the S&P 500.
Earnings season remains in its infancy but optimism is perked up and ready to be confirmed. Netflix announces tonight, which will drive sentiment significantly. Who knows what the results will hold. If Netflix management guides upward, I think we’ll be setting new highs for both NFLX and the S&P 500 tomorrow. We won’t have to wait long to find out.
Macro data for the US is not terribly material this week so the major influences will be earnings reports, any noises that come out of the Fed, and headlines from President Trump. I can’t handicap those catalysts but earnings and the Fed are not likely to sink the tape. Does that therefore favor the bulls? Probably.
I think the market sees the January rally in stocks as a continuation of the bullish trend from ’24. I think the market also sees the January rally as a confirmation that the new year will be a good year. In the absence of material fundamental developments, investors are projecting the past into the future and every uptick confirms their bias.
I’m not saying they are wrong either… I’m just saying that the sentiment pendulum is swinging towards optimism and that won’t stop on its own anytime soon.
Something fundamental could certainly upset this but all things being equal, I think all the usual suspects are going to doing all the usual things and we are heading north.
See you tomorrow.
-Mike
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