Market Takes a Breather, But Don't Get Too Comfortable
Things are certain to heat up Tuesday with Microsoft and AMD earnings on tap, and market conditions much different than last time around.
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The rotational action took a rest on Monday, with the Magnificent Seven outperforming with a gain of about 1% while the broader market struggled with negative breadth and the Russell 2000 IWM lost about 1%. It isn’t unusual to see this sort of choppiness as new trends emerge, but they make mar marketket players nervous as there have been so many failed rotations in the last couple of years.
With big earnings coming up for several Mag 7 names this week, traders are betting they will see positive reactions after the recent pullbacks, although market conditions are very different now as we head into the Fed interest rate decision on Wednesday.
Small-caps have been a bit overheated, and they took a breather Monday. Still, it was healthy action, and there aren’t any major breaches of support. While I remain optimistic about better trading in the group, it would be a mistake to expect a straight-up trend.
Keep in mind that we are heading into the dog days of summer and negative seasonality in the fall. Hopes of a Fed interest rate cut will help, but there are other issues, such as a slowing economy, that will have an impact.
We have Microsoft MSFT and Advanced Micro Devices AMD reporting on Tuesday after the close, which will liven things up. It was a day of rest on Monday, but the action will pick up for the remainder of the week.
Have a good evening. I’ll see you Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
