Magnificent Seven Leads Rampage of Buying but Trump Looms to Stop Momentum

Worries about tariffs and the economy were pushed aside on Monday, which allowed the S&P 500 to jump up by 1.8%. There was a rampage of buying, with the Magnificent Seven leading the charge with a gain of more than 3%. It was a sea of green with breadth running more than three-to-one positive and the Russell 2000 IWM gaining 2.6%

While it was a very positive day for the bulls, the issue now is whether the momentum can continue. Big jumps in a poor market are not unusual, but many of these bounces tend to fail as it becomes clear that the issues that caused the pullback are still in place.

There is a very good likelihood that President Trump will say something again about tariffs that will spook the market, especially if the retaliation tariffs go into place as they are supposed to on April 2. The level of economic uncertainty remains very high.

Technically, volume fell from Friday because Friday was options expiration, so the big jump on Monday may not qualify as a follow-through day using the Investor's Business Daily definition. Nonetheless, this is the type of action that typically leads to more upside. There are a lot of folks who were not well positioned for this move, and they are likely anxious to put some money to work. No one wants to miss the recovery at this point so there is a tendency to be a little less disciplined in order to put more cash to work.

There are consumer confidence numbers due on Tuesday morning that may have some impact, but the only thing that really matters right now is tariffs, and Trump is indicating a high level of flexibility. That can change fast, so make sure you are ready for some volatility.

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

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