The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
A small dip.
Overnight news was tame and overseas markets were mixed small. Our futures were about flat in the premarket and that’s how we opened. Weakness showed up around 10:30 AM and the tape gathered downside momentum after lunch. Chairman Powell made some midday comments that highlighted the dual risks of the current monetary policy and perhaps that explains spooked equity markets. Yields fell small across the curve and capital flow was a bit higher at 113%.
It certainly seems like we just experienced a small risk-off event. Today’s headlines don’t seem to be powerful explanatory reasons for the risk-off behavior though. While Powell’s comments highlight risk, he didn’t reveal anything to markets that they didn’t already know. Consequently, I chalk up today’s drop to typical market gyrations. Stocks have gained a lot recently and sometimes the market pares things back. Today’s price action, by itself, is run of the mill and unconcerning.
What really matters is *how* the dip-buyers respond tomorrow, or the next day. Today’s drop should be catnip for all the underperforming managers and confident longs. Either those players are out there with significant capital or they’re not.
If the headlines stay relatively innocuous overnight, I think the tape won’t trade heavy for long.
We’ll find out shortly.
See you tomorrow.
-Mike
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