Dip Buyers Provide Support... But Don't Get Too Comfortable
This market's major issues won’t be resolved easily when there is so much uncertainty.
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Worries about interest rates and inflation caused some panicky selling Monday morning, but the dip-buyers were ready this time and provided support. All the major indexes closed near the highs of the day, with the DJIA leading with upside of around 0.85%. Due to softness in smaller stocks, breadth was around 4,200 gainers to 5,400 losers.
Magnificent Seven MAGS names lagged mainly due to softness in Nvidia NVDA, which had reports of technical issues with its chips, but dip buyers drove the stocks back up in the final minutes of the day.
The bounce action helped to create a little support, but there is a flood of news coming in the next week, which will determine if that support holds or not. We have PPI and CPI inflation reports and earnings from the big banks coming up. Donald Trump will take office next Monday, and thenwe will start hearing about tariffs and other issues. No one knows what to expect, and that has been an issue for the market.
The good news is that there are hundreds of stocks that have suffered deep corrections and are in good shape for some recovery. Outside of mega-cap technology names, valuations are fairly attractive, and earnings reports will be an obvious catalyst.
The PPI report will be released on Tuesday at 8.30 a.m. — could be a problem if it is hotter than expected for the second month in a row. Inflation and interest rates are still major issues and won’t be resolved quickly or easily when there is so much uncertainty.
Have a good evening. I’ll see you Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
