Mixed Market Action Could Easily Lead to More Upside

Equities consolidated for a second day on Tuesday as investors contemplated President Trump’s insistence that he is ready to impose reciprocal tariffs on August 1, regardless of progress on negotiations.

The market action was mixed, with the senior indices losing a few points while the Russell 2000 outperformed with a gain of 0.7%. The strength in smaller stocks resulted in positive breadth of around 6,200 gainers to 3,700 losers. There were over 300 names hitting new 12-month highs.

It was a very narrow range of action, but that isn’t negative. Stocks need to take a rest, and there are now no signs of worry or concern. While the tariff issue creates uncertainty, market participants are taking it in stride.

Interest rates and the dollar moved higher for the second day, which is largely a function of concern about the economic impact of tariffs, but the reaction is mild and is not indicative of a major turning point.

There isn’t much news flow on the agenda the rest of the week, so tariff talk will continue to dominate the action, but next week there is CPI, retail sales, housing data and consumer sentiment in addition to the start of earnings from money-center banks.

Bears are still predicting that a market top is about to occur, but the price action is not confirming that hope at this point. This is just a healthy consolidation, and it could easily lead to more upside.

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

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