The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Trend starting?
Futures went slightly positive last night and they implied 40-50 points of upside as we approached the open. Despite the crude higher and yields higher results in other markets, stocks started strong and stayed strong. Chips led the way higher, helping the Tech sector outperform for the day. Capital flow remained low at 80%.
The first wave of earnings announcements arrived today and while 15 of 16 beat their estimates, only 6 of the reporting stocks climbed. This isn’t awe-inspiring for the bulls who counted on earnings season to galvanize the market into a tape-chasing rally. That being said, the broader market rallied, in the face of pressure from the crude and bond markets. Why might that be?
Perhaps today’s wave of earnings didn’t ignite earnings excitement for the actual reporting stocks but the number of beats is still eye-popping. Perhaps investors are expecting greater things from the firms that will announce shortly? Perhaps announcements from the sexier sectors, like tech, are what investors are preparing for? Tesla and Alphabet announce after the close tomorrow. Apple, Amazon, Meta, and Microsoft announce next week.
Or maybe investors are just playing chart games again? Today’s rally bounces the index off the support of the 50-day moving average. Additionally, we are about 110 points below the all-time highs for the S&P 500. That’s not a lot of distance to close and if one is inclined to think that some huge earnings results are going to kick the market upward, getting in ahead of a breakout move makes a lot of sense.
The equity market has ping-ponged between concerning itself about, and ignoring, higher yields for almost two months. Today it ignored them. Who knows what it will do tomorrow?
But if stocks were going to ignore rates for a stretch of time, now’s a pretty good time to start. The stocks that have led the entire market are on deck to report, the index’s technicals are favorable, and the broader mood is neutral.
Seems like the deck is stacked in the longs’ favor.
See you tomorrow.
-Mike
Visdom Market Commentary
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
