The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Pros and cons
US stocks struggled to figure out how to balance the bullish and bearish events of late. New stories of a potential ceasefire between the US and Iran, and subsequent negotiations, pushed crude prices down considerably. Rates fell as well and stock futures rallied considerably in the premarket. S&P futures implied 70 points of upside before regular hours trading. The index opened about +60 but faded quickly. Concerns about capex and the chipmakers spread to the broader market and the index was flat by 10:30. We bumped along, spending most of the day down about 20 points, before catching a bid late and finishing about flat. Capital flow was light again, 89%. Investors weren’t motivated despite the considerable intraday price action.
For equities, today’s trading resembles a holding pattern. Despite a bullish run in the morning, stocks didn’t want to go anywhere really. They happily gravitated back to Friday’s levels and it seems the market needs a concrete material catalyst to zoom off in a direction. Yet another promise of a US/Iran resolution just isn’t cutting the mustard for the longs. And the continued hand-wringing over the capex cycle in the AI narrative isn’t gaining traction for the bears either.
If the market is going to go somewhere, it looks like it needs some news. On the horizon are a huge number of earnings reports. 174 S&P 500 stocks are releasing this week, including these 4 Mag 7 stocks, Apple, Amazon, Meta, Microsoft.
Of course, the FOMC also delivers news this Wednesday. The rates market prices in a 38% chance of a 25-bip hike. That is going to be a doozy of a bearish event if they actually hike. Even if they don’t hike, what they say is going to be material to both stocks and bonds.
As such, it looks like the market is going to move once we hear from all those reporting companies and the Fed. The fact that the market isn’t moving in anticipation of those events is also telling. The market doesn’t have a lean. So good news, or bad, isn’t priced in. We’re going to move with the news and data as it comes.
If that’s the present state of the market, things should start to trend tomorrow due to the first big batch of reports (34 coming tonight and tomorrow morning). The major price action probably kicks off Wednesday afternoon with the FOMC decision and press conference though.
See you tomorrow.
-Mike
Visdom Market Commentary
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