If Bears Are Looking for a Sudden Market Collapse, They're Likely to Be Disappointed
One of the most positive aspects of this market is the strength in secondary stocks.
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A week ago, market players were bracing for a long-awaited market correction after employment data was revised significantly lower. The bearish celebration didn’t last long, though, with stocks bouncing strongly on Monday as investors anticipated a much more dovish Fed that would start cutting rates in September.
The action was a bit rocky the next couple of days as the bears tried to create worry about tariffs and economic news, but the bulls shrugged it off and kept plodding away.
The star of the show was the mighty Apple AAPL, which returned to its days of glory following news of substantial investment in the U.S., which would help it avoid tariffs that President Trump is imposing on India. Apple stock was up over 13% for the week and helped power the Magnificent Seven ETF MAGS to new all-time highs.
While the bulls continue to warn about the economic disaster that awaits, the price action remains extremely strong. On Friday, there was another good example of intraday strength with the S&P 500 trending higher most of the day.
However, one of the most positive aspects of this market is the strength in secondary stocks. All week long, there was a long list of names moving up more than 10%. That is partially due to small-cap earnings reports, which generate elevated volatility. There is strong interest in lower-priced stocks that have lagged the powerful Mag 7 for a very long time.
Next week we will have a few more earnings reports straggle in, but we are moving into the dog days of summer and peak vacation time on Wall Street.
CPI and PPI are due on Tuesday and Wednesday and will attract some attention, but the bears have been wrong-footed consistently on these data reports and, as a result, have fueled even more upside.
The bear’s best hope is that upside momentum will cool off, but if they are looking for a sudden collapse, they are likely to be disappointed.
Have a great weekend. I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
