The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Well, that was quick
Fears triggered on Friday were soothed over the weekend. President Trump walked back the tension and markets responded quickly and significantly. S&P futures traded +50 points last night and +80 in the early morning premarket. Precious metals rallied multiple percent and the Dollar strengthened. The US bond market was closed for Columbus Day but yields will certainly pop when they do begin trading. The risk-off trade began unwinding last night and continued with gusto through the regular trading hours. Capital flow was slightly higher at 108%.
The dip-buyers win again. The dip was brief but the lesson is the same. Buy early and buy often…. And buy double on any negative news, especially tariff talk.
Markets haven’t quite discounted Trump’s tariff talk as though he were the boy who cried wolf but they are getting there. Obviously there’s a danger in completely discounting what he says going forward but the pattern is pretty clear. I wonder how much risk-off reaction we’ll see the next time. Probably not much.
At some point, *some* bearish development will not be easily dismissed. It will be the real deal. And the dip-buyers who act in that moment will suffer greatly. But until then, the dip-buyers continue to win, and win big. Have they been set up for an eventual calamity?
Probably. But that’s a hypothetical future. And the last, what, 50 years are on their side. Until a true bear market occurs, the permabulls are right and they control the narrative.
Friday’s drama is comfortably in the rearview mirror. Maybe the danger it highlighted is worthy of thought, but earnings season is about to start and we’re about to print new all-time highs.
Are the longs whistling past the graveyard? The bears think so but nobody is listening to them anymore.
It’s back to business for the longs. Get ready for the earnings season narrative to materialize. It’s going to be a mix of awe in the results and optimism for the future.
See you tomorrow.
-Mike
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