In a highly volatile week, what stood out to me was how the geopolitical wild card kept swinging up and down, dragging market sentiment along with it. A relatively benign CPI print later in the week provided some much-needed relief. Not the SpaceX IPO.
These were the backbone of an unexpected leadership role by the least sexy of the majors — the Russell, which closed the week at all-time highs.
From a price action perspective, I was surprised by Thursday's strong opening following Oracle's gloomy moment the previous day. Maybe something was already in the air — because by mid-session the TACO trade was served hot and tasty, and that changed the tone of what had been a very difficult week until then.
To prove that the Wall Street theme park is still open, the VIX travelled from 23 to 17 during the week. Despite early geopolitical pressure, WTI's downward slide continued, dragging yields below 4.5%.
The Messiah and The Clearance
Jensen the Messiah Huang spoke and the market listened. I was surprised by how the week started with a strong rebound from a nasty Black Friday, almost without a hiccup throughout the session. Semis stayed at the front by a mile, ending the day up more than 6% — a clear sign there were deals investors did not want to miss.
The Pump Fake and The Second Semis Flush
On Tuesday, the Red Sea struck again. After a promising first twenty minutes that looked ready to confirm Monday's buy-the-dip parade, the market suffered another meaningful flush — one that even undercut the Black Friday lows from just two sessions earlier, with SOX once again pointing the way downhill. What impressed me was how the market absorbed that flush and still finished in the upper half of a large daily red candle, suggesting bears would not be taking a second major victory lap within the span of just three sessions.
Pump Fake Strike Two and The Floor
A somewhat mixed CPI print got the mid-week session off to yet another strong start, especially for the Russell, but the engine sputtered once more as selling pressure returned and pushed prices back toward the Black Friday lows. I saw a market trying to find a floor. However, renewed geopolitical pressure and, to be honest, a sticky inflation backdrop were both pointing to what I like to call structural nervousness overall. I am observing more intraday selling pressure and not many places to hide.
The Week Ahead From The Deck
Above all else, two variables: the Hormuz deal — its shape, its outcome and, more importantly, the market's interpretation of it — and the season premiere of "Is Kevin Warsh a Hawk or a Dove?"
I do not have much popcorn left from last week, but I am almost guaranteed to finish this one scraping the bottom of the bucket. Hopefully I will not be doing the same with my beloved leveraged ETFs. Mr. Wall Street once taught me that the legend of buying the exact bottom tick is precisely that — a legend.