It's the Bulls' Game to Lose Now
What was most significant about the action Tuesday was the improved market mood.
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Following a gap-up open and a move through some key technical levels on Monday, the market action improved further on Tuesday. While breadth was weaker, there was steady improvement in the intraday price action with the indexes hitting a series of intraday highs before a sharp drop in the last few minutes of trading.
New 12-month highs expanded to around 400 names. The Magnificent Seven MAGS names were the leaders once again with a gain of about 2.3%, and that offset less broad action.
What was most significant about the action Tuesday was the improved mood. An uptick in CPI was ignored, and weakness in bonds didn’t slow down the equity bulls. The yield on the 10-year Treasury bond IEF moved back up over 4.5%, but the market was able to handle it because of renewed optimism about economic growth and fewer concerns about a recession.
President Trump’s trip to Saudi Arabia also helped boost the market action. Trump touted planned investments of over a trillion dollars in the U.S. from the Middle East. Several deals were announced, including a partnership between the UAE and Nvidia NVDA for 18,000 Blackwell chips, and a UAE partnership with Microsoft-backed OpenAI to build a data center.
The Saudi meeting was very upbeat and helped to illustrate the sorts of trade relationships that Trump is trying to establish around the world. It was a positive change from the contentious debate over tariffs.
While most of the gains on Tuesday were due to strength in the Mag 7, the majority of the market stayed sticky to the upside. Dip buyers were lurking, and there was a very long list of individual stocks moving up more than 10%. Traders are looking for speculative action and are creating quite a bit of it as well.
Entry points are becoming even more difficult now, but strong markets never make it easy to put more cash to work. The market needs to digest some very good gains, but there is a solid uptrend in place, and it’s the bulls' game to lose at this point.
Have a good evening. I’ll see you Wednesday.
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At the time of publication, Rev Shark had no positions in any securities mentioned.
