The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Nervous again
Overseas markets rallied some and during our premarket, risk-on was the play. S&P futures were up some. Yields were up only a small amount. Crude was down small. The S&P opened up about 10 points and treaded water around unch until 11 AM. Around that time, crude began to rally, although it was still down for the day at that moment. Stocks started falling. Whether this was coincidental or causal is unclear. About 20 minutes later, bonds started to drop and yields started climbing. For stocks, the trend lower was consistent and calm. There were only a few countertrend rallies higher but they didn’t last very long.
There were many news items that garnered attention in the financial press today. CoreWeave’s bond yields reaching distressed levels spurred many canary-in-the-coal-mine narratives and the AI investment theme felt the pressure. Brent crude hitting $110 and WTI exceeding $100 focused attention on that commodity’s intraday rally. Yields only climbed a few bips today so it its unlikely that rates had a large effect on stocks but it does highlight the risk that rates could resume climbing after a material drop.
I look at today’s market and the last week or two and I see a ping-ponging of sentiment. Optimism and skepticism swing through the markets, rooted in slightly different catalysts. Sometimes inflation was the boogeyman. Sometimes anticipated earnings was the wellspring of hope. Crude and yields had their own parts to play. It’s tough to see what, if anything, is going on out there.
I see this oscillating mood and I think it is a signal itself. It strikes me as more than the usual noise of a market. It strikes me as a sign of stress. There are fundamentally bearish forces at work, and they’ve been at work for a while. And the stock market has resisted them. In some moments, it has refuted them. I think a conclusion is pending shortly.
I believe the market will resolve lower. It could, of course, surge higher. I don’t believe it will stay in the range of the last couple months, approx. 7600-7800. My thinking is that the market has been *questioning* the environment for stocks for some time. If all the projected fears are unfounded, if rates resume a strong downward trend, if the US and Iran resolve things… well then, optimism will prevail and stocks will zoom.
Of course, the opposite is also possible. And if you ask me, the projected fears of the market are more likely to be realized.
The evidence needs to show up however. As long as we’re just speculating, we’ll keep playing stock market ping pong.
Have a great weekend. See you Monday.
-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.
