Sentiment Is Still Supportive Of Risk On.

1.) SENTIMENT – We already know that people are “angry” based on the confidence survey that the University of Michigan conducts. But this is just more confirmation from Gallup polling. Gallup’s Economic Confidence Index is at its lowest since November '23. Close to half of US adults view current economic conditions as "poor," and 73% anticipate they will get worse. Just 33% think it's a good time to find a quality job, matching the weakest reading since the pandemic. As an investor, that is the type of “worry” you want in the system.

2.) OIL – WTI recently bounced off the low end of its trend range at $85. Now it is flirting with that $100 level again. Can it go higher? Sure. I guess we can never underestimate how fanatic actors driven by strong messianic or religious agendas are willing to let their own countrymen suffer in pursuit of their goals (Iran). Right now my signals suggest a move toward $100-$102 and a failure, with a test in the $88-$93 range. So, all in all…chop, chop, chop. But, importantly, the VIX isn’t reinforcing a bearish scenario. It’s barely moving higher, which suggests there is little demand for hedging and no real sense of urgency or fear in the market. That is exactly why, if we do get a pullback in the stock market, it is more likely to be mild rather than a sharp selloff.

3.) DRAM – Yesterday I pointed to the South Korean stock market Index; Kospi 200 and its dramatic sell-off and subsequent recovery. About two weeks ago, Roundhill created an ETF to give access to more difficult-to-own stocks (Korean) to the average investor. Did that help the Kospi recover so quickly? Probably. They’ve taken in over $1B in assets in a very short period. That’s kind of funny since hardly anyone knows what Dynamic Random Access Memory (DRAM) is. But it doesn’t matter…it isn’t about DRAM or definitions. it isn't about headlines or acronyms. It’s simply about the flows going into the leaders again. Twenty years ago it was the Four Horsemen: Google, Research In Motion (Blackberry), Apple, and Amazon. Then came FANG. Then FAANG. Then the Mag 7. Before all of that, it was the Nifty Fifty: Xerox, Coca-Cola, IBM, Kodak, Polaroid. The point here is that the “name” never matters. What matters is the flows and the trend of price. Markets have had a very strong short-term run. As I mentioned above, and as VIX is suggesting, a bit of a pause (not a harsh sell-off) would not be surprising.