The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Month-end chase?
Futures rallied overnight and were bid very strongly as Europe traded. S&P 500 futures topped out at around 6:20 AM, up 40 points. The index opened about +25 points and climbed a bit further in the first 90 minutes but gave up the big gains after 11 AM, spending the rest of the session in the +10 to +20 point range. Yields fell a little across the Treasury curve today and capital flow was normal at 104%.
The major headline of the day was geopolitical. The plan to end the Gaza War was front and center and apparently only requires agreement from Hamas/Palestine. Whether markets think this deal is likely to happen or not, or last or not, is unclear. Oil prices fell all day, a meaningful amount, and that price action could be interpreted as an expectation for the peace deal to go through. We shall have to wait and see. Perhaps oil markets are truly dialed-in to the likely diplomatic outcomes. Equity and bond markets didn’t seem to care.
For stock investors, the bullishness began early, without material headlines to assist. It seems like a continuation of Friday’s rally and a return to the belief that the rally is back on track. That thinking couldn’t sustain the climb over the day though. If the usual trend-followers and momentum-players thought that they could kickstart a rally into month-end this morning, they were wrong.
We’re left with one day to go in the month and the quarter. The question is whether the flow are going to be significant to the upside or not. I believe the market expects a lot of capital flowing through to buy. Retail and institutional are true believers. It’s just a question of whether they have the muscle again.
Let’s find out.
See you tomorrow.
-Mike
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