Powell Boosts Market as Predicting the Top Becomes Very Costly
The news of a ceasefire between Iran and Israel was met with slow and steady buying all day.
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There was slow but steady buying all day on Tuesday, following the news of a ceasefire agreement between Israel and Iran. The indices moved up steadily and closed near the highs of the day.
There have been no signs of sell-the-news action so far, as market players remain very poorly positioned for further upside. Even the most bullish bull is hoping for a pullback to make entry points a bit easier. The Nasdaq 100 QQQ reached a new all-time high close but was unable to surpass the intraday high set on February 19. About 750 stocks were hitting new 12-month highs, and breadth was excellent.
It didn’t hurt that Jerome Powell was not overtly hawkish in his appearance before Congress on Tuesday. He stated that the Fed is well-positioned to wait and see on rate cuts. He believes that tariffs are likely to push up inflation, but economic conditions for jobs have remained solid. Forecasts for higher inflation are the primary problem. Inflation is still mildly elevated despite a substantial drop. Powell will have the opportunity to repeat himself on Wednesday when he appears before the Senate.
The bears who have been anticipating negative news for months are the primary driving force behind the market strength. They are on the wrong side of the action and are being forced to adjust before they rack up even bigger losses and underperformance.
The bears are still betting on Powell’s economic forecast of higher and slower growth, but the timing has been so poor so far that many are unable to stick with their negative posture. They will need some substantial downside just to get back to even.
Some inflation data is coming up later this week, which may be of interest, Trump is at a NATO summit and the Senate is about to start voting on the "big, beautiful budget bill." All news is good news right now, and trying to predict a market top is a very costly endeavor.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
