The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Compulsion.
Dip-buying dies hard. News and data today weren’t anything special but futures traded off 40-50 points in the premarket. Maybe investors were expecting the market to retrace after 9 consecutive positive sessions. The index opened down about 40 points and the tape began a steady climb from 10 AM until 2:45 PM. The index topped out down 3 points and faded in the final stretch. The talk of the day concerned Warren Buffet’s announced retirement over the weekend. While that’s certainly news-worthy, it doesn’t mean much to the fundamental investing landscape. Treasury yields climbed a bit today and gold continues to rocket northward.
Today’s price action isn’t significant. At some point, when news and data are snooze-worthy, the tape can’t extend the rally. That’s what we saw today. It’s very interesting to see how influential the bulls could be though. The morning’s dip was firmly turned and intraday momentum was mostly higher. The usual players went to their usual plays. The look and feel of the market is reminiscent of ‘23 and ’24.
This makes sentimental sense of course. The bottom does appears to be in. At least, that’s the consensus thinking. And if you’ve seen the bull run anytime in the last two years, and you think, we’re at the start of a new continuation of it, you’re going to behave as if…. and next thing you know, the intraday chart looks very good… until 2:45 PM.
Here’s the picture of the day and imagine how happy the longs were at 2:30 PM.
My interpretation of today is simply that the longs believe we’re at the start of the next phase of the multi-year bull market that began in late ’22. That group of investors are convinced and they are going to act accordingly.
The bears think we’re in a bear-market rally, albeit one that ripped them to shreds in record time.
The fundamental landscape still tilts to the bears but a couple of good data points and some positive tariff talk will change things dramatically, and the longs are counting on that. They’ve built those positive developments into their expectations.
We’re at a stretch where maybe the two camps are out of ammo as well as conviction and we need to get some concrete answers from data or policy-makers, at which point we can move convincingly in a direction.
See you tomorrow.
-Mike
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