'Bright Green' Breadth and an Appetite for Speculation Give Market a Bullish Feel
The most impressive thing Thursday was a very large number of stocks jumping more than 10%, but tariff news has the potential to shake things up.
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Earnings news from three Magnificent Seven MAGS names was mixed, with shares of Microsoft MSFT losing 6% and Meta META gaining 1.4%, but outside of the mega-caps, the action was extremely positive Thursday. Breadth was bright green at almost 3 to 1 positive, and there were 425 stocks hitting new 12-month highs. The Russell 2000 ETF IWM led with a gain of 1%, but the most impressive thing was a very large number of stocks jumping more than 10%. There was a strong speculative appetite, which is good for stock pickers.
Late in the session, news hit that President Trump intends to impose 25% tariffs on Mexico and Canada starting on February 1. Trump is trying to force action on fentanyl, so things could change in the next 48 hours. The market dropped sharply and then rebounded on the news. It didn’t have too much impact initially.
This was good action Thursday, and felt very bullish. The indexes are not extended, and there continues to be a high level of optimism. The Fed is on the sidelines, and inflation appears to be under control. There have been concerns about the impact of tariffs, but the late announcement had little impact. Economic optimism continues to be strong, and earnings news has been good, if not spectacular.
We’ll see what happens with tariffs, but it is important to understand that there are many stocks that will not be impacted and many that will even benefit. Trump says they are in the process of enacting China tariffs, which will shake things up a bit.
Apple AAPL is the last of the Magnificent Seven names to report earnings this week. It had a good bounce on the DeepSeek news because it isn’t already heavily invested in AI.
Apple earnings are slightly ahead but are not attracting immediate buyers. Guidance on the conference call will be key, but it doesn’t look like Apple will have much of an overall market impact.
Have a good evening. I’ll see you Friday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
