The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Break higher.
Overnight action was lacking and futures traded up small overnight and down small in the early morning. The index opened down 15 and there were no news or data catalysts at play. It looked like yesterday’s late break to a new all-time high would be gently undone. Dip-buyers slowly went to work however and the index was flat by lunch. Shortly after the FOMC minutes released, the market squeezed higher about 10 points, setting new all-time highs again. The index limped along for the remainder of the session and finished with a new closing high. Yields fell small and capital flow was about normal (98%).
Fed minutes weren’t too interesting although investors pushed the tape upward a handful of minutes after they were released. The Fed is going to sit and wait and watch and see. This wasn’t too surprising but now the markets know that the Fed in a take-no-action phase for a while. Things can still happen and the Fed’s hand may be forced but *probably* the Fed will do nothing until after the summer.
Should this revelation be bullish? It’s not obvious to me but at some point the tape climbed and the market piled in quickly, taking us into the 6140 price level. Now we’re here, new highs. What next?
This breakout higher is small and weak. But it is a breakout. This could draw investors in over time, as each becomes more comfortable with continuation higher, in their own time. Does this mean we’re looking at a week or two of slow and steady rallies? Probably.
Like so many past bullish stretches, the risk is in the headlines. Markets are numb to tariff talk so it’s going to take some kind of nasty economic development or some bolt-from-the-blue geopolitical event. There is one more possible catalyst, Nvidia earnings. NVDA reports after the close, a week from today. That company’s guidance is the secret sauce and we’ll just have to see what they say and how investors react.
Until then, maybe we just melt upward.
See you tomorrow.
-Mike
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