The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Soft Friday.
Data and earnings reinforce the existing narratives and seemed to keep the bullish trend going, albeit gently. Tariff-talk 2.0 stepped into the spotlight and helped the bears. A whole bunch of industry-specific tariffs are now announced, in addition to country tariffs. EU tariffs in the 10-15% percent range captured headlines and left markets in the familiar position of confusion. The S&P opened up about 15 points but slid to flat and then slightly down from the morning to the afternoon.
Capital flow was healthy at 112% and yields fell small across the curve. Fed cuts for 2025 now price at 45 bips.
Price action today was uninteresting and doesn’t give us any tidbits to discuss. It was a true midsummer Friday trading session. The bears happened to win the day but the bulls won the week. Is the short term trend now at risk? Maybe, but it’s a weak case.
*Maybe* the healthy volume today is telling us something more interesting. The fact that the volatility was low but the capital flow was high suggests that investors are not on the beach. They are active on a summer Friday. Why are they so active? They didn’t push the tape much so we can’t interpret this directionally. Is there a rotation at work? A rotation the has a high probability of continuing?
I suspect that the answer is yes. It’s not apparent however. Sector performances aren’t suggesting a rotation. Style performances are just as inconclusive. Maybe fixed income is getting some capital from equities? It makes sense from an asset allocation standpoint. Whether it’s real or imagined is my question.
Anyway, if rotation is what’s keeping volumes elevated, it will be interesting to see whether that affects the existing trends.
Monday brings fresh earnings results and the first massive wave of reports. 110 S&P 500 companies will report.
That’s plenty of info for generating new catalysts. We’ll see what happens.
Have a great weekend, see you Monday.
-Mike
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