That Bull Feeling Returns as Trump Seems Aware of Market Impact

Market participants seemed to have forgotten about tariffs and DeepSeak on Tuesday and produced some very positive action. 

It felt like a good old-fashioned bull market with the Magnificent Seven MAGS leading a broad rally with almost three-to-one positive breadth. There was plenty of strong action in secondary stocks, and the list of names that moved up by more than 10% was quite hefty.

There wasn’t any specific news to spark the rally, but there was relief that the tariff issue had not escalated. Market players were just happy to focus more on individual stocks rather than political headlines. The recent volatility has wrung out some of the negativity, and many stocks have had decent technical support and are not overbought.

There is still the risk that Trump may make some moves that the market does not like, but he appears to be sensitive to market reaction to his policies.

In addition to political risk, we have some big earnings from Google GOOGL and Amazon AMZN this week, as well as an important January jobs report. Bonds started weak but rallied, which is an indication that worries about inflation are not building.

The main issue now is whether the market can build on Tuesday’s positive action. It was some of the best action we had this year and it was refreshing to see stock pickers become more aggressive.

Alphabet earnings are out, and they are a miss on revenue. The stock is down about 5% on the headlines, but guidance is key. The main thing investors will be looking at is the level of capital spending on AI.

If the Magnificent Seven sees some sympathy selling with Google, then I’ll be looking to see if we have rotation into other areas of the market.

Have a good evening. I’ll see you tomorrow.

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