Morning Commentary
There is no doubt the stock market has been sluggish with August being the toughest month; and yet, it’s the pulse of individual investors that worry me the most.
I’m not concerned about the wisdom of the crowds (a lot of movie plots and television shows using this premise), or the madness of the crowds (see Charles Mackay); my concern is with the crowd missing out again.
Indifferent Bears
Wall Street lore has it that whatever the emotions of individual investors are, stocks will move in the exact opposite direction. If that’s the case, we are setting up for a mammoth rally higher. Bullishness has plumbed from already low historical levels (historical average 38.5%), while bearishness is at its highest point since March 16, 2017.
Sentiment |
New Level |
W/W Change |
Bullish |
28.1% |
-6.1 |
Neutral |
33.6% |
+0.6 |
Bearish |
38.3% |
+5.5 |
I’m a contrarian, but I think the Street is full of hubris looking down their collective noses at the individual investor’s emotions and timing. Wall Street sentiment rarely dovetails correctly with market direction. On that note, the Street continues to grapple with trailing performance and finding a way to talk stocks lower for a fresh chance to get a bite out of the apple.
While the Street plays its games, mostly to mask poor performances, I caution individuals from settling into the same kind of thoughts about picking the bottom of the next pullback. Sure, it is great buying dips, but more and more would-be investors have been missing those pullbacks; and now, it seems as though more will skip as they brace for a pullback.
These are the summer doldrums for sure. Just don’t be lulled into indifference.
Commodity Trends
We are updating our research on the rails, which is one of the best proxies for the economy, and two areas stand out from the rest for the second quarter: coal and metals. Both have been impressive, particularly coal. The full report will be completed this week, but it’s a reminder that the economy is on the move.
Coal - Year to Year Change |
Revenue |
Volume |
Rev/Carload |
NSX |
+32% |
+27% |
+4% |
CSX |
+27% |
+7% |
+19% |
UNP |
+25% |
+17% |
+7% |
KSU |
+102% |
+47% |
+38% |
Metals - Year to Year Change |
Revenue |
Volume |
Rev/Carload |
NSX |
+11% |
+5% |
+5% |
CSX |
-4% |
-6% |
+1% |
UNP |
+24% |
+15% |
+8% |
KSU |
+10% |
=1% |
+11% |
I continue to see great signs that the underlying elements of the economy are moving like they haven’t in years. The wheels of commerce designed for growth and prosperity are rusty but don’t ignore them or the fact that the overall equity rally is justified and is just beginning.
Today’s Session
"All options are on the table"
This is President Trump response to reports North Korea launched a ballistic missile over Japan this morning.
As the President prepares to visit Texas, which is still amid a historic natural disaster, the White House is reiterating it has several options to deal with the Hermit Kingdom, but acknowledging the belligerence of Kim Jong Un saying "the world has received North Korea's latest message loud and clear."
Yes, the world has heard the message, and even before this morning, it knew North Korea’s regime has contempt for its neighbors. But, what happens now? Some experts worry about military options, even preemptive strikes, while some observers see this latest attack hastening the growing divide between the United States and China.
It’s the kind of uncertainty that moves markets as money seeks safe havens like bonds or gold.
We have been raising cash so all subscribers should have dry powder to buy weakness; although, this is going to be a long week that culminates with the jobs report.
Meanwhile, this morning sees carnage in Finish Line (FINL), which isn’t a surprise. Best Buy (BBY) however posted a huge comp store number that initially sent shares higher. Must have been an ugly conference call because the two-dollar pre-open gain has become a three-dollar pre-open loss.
This earnings season, so many stocks have made abrupt reversals after major earnings beats underscoring the aura of anxiety that can only be cured by letting some weaker hands sell while economic data gives a refreshed buy signal.
Today, get the latest on consumer confidence as well as a big treasury auction today, but it’s unlikely the market can reverse into positive territory this session. I will have updated technical parameters in the afternoon note.
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7/3/2025 9:45 AM | NICE & STEADY AS SEMIS CONTINUE TO CHIP IN |
7/2/2025 1:44 PM | Materials' Strength Continues |
7/2/2025 9:38 AM | BARNBURNER |
7/1/2025 1:29 PM | Rotation |
7/1/2025 9:45 AM | FEAR OF MISSING OUT IS CREEPING IN |
6/30/2025 1:24 PM | Steady As She Goes |
6/30/2025 9:54 AM | SUMMER RALLY STARTS |
6/27/2025 1:35 PM | Reaching New Heights |
6/27/2025 9:39 AM | THERE'S MORE! |
6/26/2025 1:10 PM | S&P Approaches Record |
6/26/2025 9:51 AM | CHIPS MOMENTUM CONTINUES |
6/25/2025 1:42 PM | Tech Stocks Power Nasdaq 100 |
6/25/2025 9:47 AM | CLIMBING MOUNTAINS OF WORRY |
6/24/2025 1:47 PM | Peace Rally |
6/24/2025 9:48 AM | PEACE THROUGH STRENGTH: THE MARKET LOVES IT |
6/23/2025 1:47 PM | Getting Some Resolve |
6/23/2025 9:51 AM | BRACING |
6/20/2025 1:29 PM | Second Triple Witching |
6/20/2025 9:38 AM | POWELL BLEW IT |
6/18/2025 12:41 PM | FED Day |
6/18/2025 9:45 AM | ROOM WITH A VIEW |
6/17/2025 1:26 PM | Tension Continues |
6/17/2025 9:50 AM | THE BIG TECH TEN & CO |
6/16/2025 1:34 PM | Fears Subside |
6/16/2025 9:44 AM | DRUMBEATS OF PEACE |
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