The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Lackluster.
Dip-buyers spent the weekend looking forward to scooping up stocks today. Futures traded up overnight and in the premarket. They implied about 30 points of upside all morning. The index opened +20 and climbed very quickly but briefly, topping at +30 about 2 minutes into trading. Bears took over and drove the index lower for an hour, all the way to -46. That couldn’t inspire fear though and the index returned to flatish before lunch. We wandered around Friday’s closing price for the bulk of the day. The tape fell significantly towards the close when President Trump emphasized coming tariffs with Canada and Mexico at a press conference. Capital flow was about 115% and yields came in 2-4 bips.
The bulls did not announce their presence with authority today. They didn’t capitulate to the bears either. After a substantial dip since Wednesday, the usual bounce is MIA. Is this a sign of something? I think bears want to spin today as a big victory. The tape hasn’t shown the life it used to so… something something … the bull is dead/dying.
I think that’s stretch. However the bulls didn’t do themselves any favors today either. I don’t think one can look at the price action and interpret much about the dynamics under the hood. Maybe the most appropriate thing to conclude is that the downside momentum of Thursday and Friday is muted. Fresh momentum, whether up or down, needs to find a new cause.
That cause will likely be Nvidia’s earnings report after the close on Wednesday. That stock is so important to the S&P 500 it seems like most investors are going to stand pat from now until then. Once NVDA reports, and more importantly guides, then the market will trend.
Until Wednesday’s report and Thursday’s open, we’re probably just biding our time.
See you tomorrow.
-Mike
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