Is the 'Smart Money' Telling Us Where This Market Is Headed?

The S&P 500 hit another new all-time high on Wednesday, but what has been most impressive about this market recently is the intraday strength. The last eight trading sessions have seen a weak open and a strong close. There have been no intraday reversals to the downside during this run. The conventional wisdom is that "smart money" buys the close, so this sort of action bodes well for further upside.

While the day started slowly, news of a trade deal with Vietnam and renewed strength in the Magnificent Seven MAGS helped to provide a steady supply of buyers. In addition, there was some upbeat holiday trading. My list of small stocks moving up more than 10% was very long, and by the end of the day, the number of new 12-month highs had expanded to more than 700 names. It is exactly the sort of action that tends to occur when market players are feeling good and looking forward to a holiday break.

The bears did have some ammunition in the form of a weaker-than-anticipated ADP jobs report. It came in quite soft, but the full June report is due out on Thursday morning and often does not confirm the ADP numbers. There was also news of layoffs at Microsoft MSFT, and there are clear signs of slowing, but so far, that doesn’t seem to be a negative for the market. If the June numbers are weak, it may push the Fed to cut rates sooner rather than later.

Don’t forget that we have a half-day session on Thursday with equity markets closing at 1 p.m. ET. It will be a thinly traded session, but that doesn’t mean that it won’t be positive. We will see how the market handles the jobs report. The current theme appears to be that all news is good news.

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

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