The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Slow-motion momentum
US/Iran news was light and therefore not a catalyst. That said, oil dropped meaningfully today. The short-term charts for both WTI and Brent suggest we just topped. Maybe that inspired the risk-takers. S&P 500 futures began climbing slowly overnight and implied about 30 points of upside during the open. The S&P opened a little better than that and consistently climbed higher over the entire day, printing new all-time highs in the afternoon. Yields across the curve came in a few bips and macroeconomic data this morning supported the economy-is-fine narrative.
Do we want to call today, or recent highs, a breakout and claim this is a technical breakout? Do we want to say that investors have moved on from the US/Iran conflict almost completely? Do we think that this earnings season has cemented the idea in the markets that earnings growth is high, stable, and getting faster?
Take your pick or use all three in combination. The bull market has resumed and explaining why after-the-fact is of minor importance. What is of major importance is what lies ahead.
April ADP (+120k est vs +62k prior) prints tomorrow and serves as a warmup for April nonfarm payrolls (+65k est vs +178k prior) on Friday.
To keep the bull running, the market needs to see labor data that shows a strong economy. Anything in the neighborhood of the published estimates will be seen as confirmation of current outlooks. That will be bullish.
The climb of stock prices since March has been so smooth and consistent that it is drawing more and more capital in. This coincided with a sequence of positive data and announcements. The scary environment of late March as slowly become more attractive. And with each positive increment, prices climb. And by the time we get to now, the broad macro environment looks pretty good. The stock chart looks pretty good. And the fundamental projections of corporate results look pretty good. It’s enough of a positive mix to get sidelined capital in on the long side.
And the upside slowly continues. To the surprise of market pundits but not to the dip-buyers.
See you tomorrow.
-Mike
Visdom Market Commentary
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