The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Not smooth sailing
Peace in the Middle East remains elusive and midday reports of explosions, attacks, and stumbling blocks in a US/Iran agreement took their toll. The S&P opened up and went negative around noon, leaking value slowly over the afternoon. Crude prices climbed, as did yields. The usual war trade was in motion. It didn’t alter the mood of the market much though.
While the setbacks in the Middle East don’t seem particularly bad, relative to previous negatives, perhaps the markets were sensitized to any bearish catalysts due to the overbought technical conditions of stocks. Lifting offers in the midst of US/Iran disappointments, fresh attacks in Lebanon, and yesterday’s all-time highs is probably asking too much of even the most enthusiastic permabulls.
Maybe this shallow dip is also enough to bring out the dip-buyers tomorrow also. Given the invincible market strength since late March, any investor that missed that rally will be looking to get in. Certainly any money manager lagging, will be dip-buying to catch up. There is a lot of capital willing to sit on or under the bid right now. If the market turns higher, they may also chase the offers up. This situation will persist until a truly awful headline alters their mindset.
Given that awful headlines *appear* to be mostly behind us, the upside looks more likely than the down.
Nonfarm payrolls (+65k est vs +178k prior) print tomorrow morning. It is very unlikely that NFP scares the market but there’s another possibility too. What if the NFP data provides a very positive surprise? Not necessarily a huge job print, but something that reinforces the-economy-is-strong-and-growing-nicely narrative. That might inspire the tape to jump up again.
What’s a number like that look like? I’m not sure. Probably something between +60k and +100k. We’ll find out soon enough.
See you tomorrow.
-Mike
Visdom Market Commentary
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