Bears Fail to Capitalize as Seasonal Strength Gains Traction

A negative response to Oracle's  (ORCL)  earnings offset the celebration of a dovish Fed on Thursday, but dip buyers stepped in and engineered a robust recovery. When the smoke cleared at the end of the day, the DJIA hit a new high, up 1.3% and the Russell 2000 Small Cap Index continued its leadership with a 1.1% gain and another new all-time high. The S&P 500 went red to green, and the Nasdaq 100 cut its loss to 0.33%

The Magnificent Seven (MAGS)  lagged amid increased concerns about AI profitability, but early concerns about the gap-down open in Oracle eased as the day progressed. Data centers like TerraWulf (WULF)  and Core Scientific (CORZ)  finished with gains after opening sharply lower.

Breadth concluded with 60% gainers, and new 12-month highs expanded to 400 names.

Sorry, bears, you had a chance, but Jerome Powell was surprisingly positive, and the market is doing a nice job of adjusting to the competition and valuation concerns in the AI sector. This is looking like some good old-fashioned seasonal strength at this point.

There is a little frothiness and some overbought stocks, but as I have written repeatedly, this is a market for stock pickers. I’m disappointed I didn’t put more cash to work, but I’m seeing good results with existing positions and will redouble my efforts to find some new inventory.

At this point, a little rest and consolidation would be healthy, but action like this generates FOMO and creates a strong inclination toward dip buying. We have seasonality providing a tailwind, and there isn’t any economic catalyst on the horizon that is likely to upend the apple cart.

I would like to see a little more volatility, but this is a very healthy bull market at this juncture.

At the time of publication, DePorre had no positions in any securities mentioned.