The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Old tricks
Investor pursued risk-on trades throughout the day. Crude futures fell last night, which appeared to kick off a drop in yields and a rally in stock futures. The S&P opened about +45 and rallied quietly and without pullbacks throughout the session. Mega cap tech, especially the Mag 7, led the broader market higher. Bitcoin also rallied significantly today, with its ramp beginning around 4:00 AM. News headlines were uncompelling and capital flow was about normal at 102%. Whatever the risk-on impetus was, that motivated markets today, it began with crude overnight and grew significantly in the premarket. It extended calmly during regular trading hours.
I am not sure *why* markets embraced risk-on trades today. I can only observe that risk-on trades, which resembled ones from mid 2025, stood out. The daily chart of the S&P 500 now strongly suggests upside and bear market concerns in the financial press have evaporated. Investors got bullish in a hurry after the weekend and it looks like intraday upside ticks in the tape reinforced the optimistic sentiment.
Today was an everybody back into the pool moment. We don’t know why. Can it continue? Without a news catalyst, this looks like the start of a broad momentum trade. Maybe favorable developments between the US and Iran would be something that propels the trend along? Without something material and fundamental though, I don’t think movements like today can extend much.
See you tomorrow.
-Mike
Visdom Market Commentary
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