The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Slow start.
July began lazily and markets are embracing the summer trading attitude. For the US, markets are closed Friday for the Fourth of July, resulting in a shortened week and today’s action suggests that investors just want to start their holiday early. News continued to be immaterial, although some of the Trump headlines are interesting, what with him calling the Fed Chair a moron. Anyway, markets didn’t care much. The S&P opened down 15 points and slowly made its way into slightly positive territory by the afternoon. We rolled over a bit thereafter, on Trump tariff threats, but nothing spiraled out of control. Yields climbed, mostly on the shorter end of the curve, but that wasn’t noteworthy to the stock market.
There was an interesting rotation of performance within the market today. Most of the stocks that lagged for the year, led for today. CNBC said something about the top 50 stocks today, were down 7% over that last year. This was discussed as a possible rotation from the Mag 7-type leadership into the value pockets of the market. Additionally, small caps outperformed today as well.
No doubt, these performances reflect today’s flows. Maybe it’s rebalancing, maybe it’s a signal of changing leadership. One session does not a trend make. Let’s see how things go. I continue to believe that old habits die hard and the vanguard of the last few years will continue to set the tone as we make new highs.
This week, whether leadership changes or not, will mostly focus on the June nonfarm payrolls data (+110k est vs +139k prior) releasing Thursday, due to the holiday. Sub 50k data presents a risk to the longs, all the other numbers are probably bullish. We will just have to see. It doesn’t look like, feel like, or sound like the market is front-running the labor data with confidence so we should just limp along.
That said, with the data arriving the day before a three-day weekend in July, I suspect there won’t be much action even after the number prints.
See you tomorrow.
-Mike
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