The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Did it just happen?
I didn’t notice material headlines overnight and futures were mostly flat. They caught a small bid in anticipation of the macro data released this morning. The data showed US economic health and inflation as expected. This supported the existing big-picture narrative in the markets. It confirmed existing thinking and didn’t surprise the markets. Yields climbed early on the economic data but faded slightly over the day. Fed cutting expectations are not too different than yesterday, with 22 bips of cuts expected on October 29th and 40 bips of total cuts through year-end. Capital flow was ordinary at 96%.
We’ve been wondering when the sidelined bulls would return to work and it looks like today was the answer. While the economic data this morning wasn’t surprising, perhaps it allowed those sidelined to act. The capital flow today suggests that we didn’t inspire lots of investors to change their portfolios. It was a very run-of-the-mill rally. It happens to put a slightly bullish bow on a slightly bearish week.
It also looks like the little dip is over. We’re all chart-readers at this point and the charts look bullish. If yesterday was the local low and today was the start of the latest buy-the-dip tactic in US equities, next week should be very good for the longs.
Tuesday is month-end and quarter-end. I would expect a lot of managers to chase into that. As long as headlines are benign, I think we’re about to see a catch-up behavior at work.
See you Monday, have a great weekend.
-Mike
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