Momentum Monday - Constructive Price Action Continues

We continue to see higher lows in the indexes are they consolidate near their 200-day moving average. Consolidating is certainly more bullish than immediately selling off. It is a testament of strength and eager dip buyers.

The first trade deal is a fact. It was with the UK, one of the few countries with which the US has a trade surplus. Nothing major has changed compared to last year, other than the 10% base tariff. The market has started to accept that while it is likely that current high tariffs will be reduced for many countries, they are not going away. This is why inflation expectations are rising. This is why gold and cryptocurrencies are getting a bid. 

The Fed kept interest rates at 4.5%, citing increasing uncertainty and potential for rising unemployment and inflation later this year. What is important is that the market didn’t sell off this week. It went higher. Rallying on bad news is a reflection of bullish sentiment. 

The biggest loser last week was the biotech sector. The new FDA Center for Biologic Evaluation and Research director’s appointment caused a major selloff in gene therapy stocks, which spilled over to the rest of biotech. I don’t know if this is a short-term hiccup, but the entire healthcare sector is looking vulnerable.

We remain in a market-of-stocks environment that offers something for everyone. There are plenty of stocks that broke out and are setting up. There are plenty of stocks that broke out and are looking weaker.