Typically, a key component of a strong bull market is lots of liquidity sloshing around. It can come from several sources. When it's steady, markets behave like well-oiled machines. When it's in excess abundance, it can have the effect of laughing gas on investors, and when it dries up, markets go into withdrawal.

Over the last couple of sessions, sizzling trades have been doused by the sobering reality that liquidity isn’t abundant. If the Fed doesn’t embark on an aggressive rate-cutting cycle, the liquidity spigot will be limited. There has also been concern about the Secured Overnight Financing Rate (SOFR) and the Effective Federal Funds Rate (EEFR ) spread.

Case in point, gold, high Beta, and Momentum stocks have taken a hit. Bitcoin (BTC) has also been weak, and they're selling in super hot stocks, like quantum.

The Fear & Greed gauge is still lurking around the concept of “fear.”

Seeking Safety

There was nowhere to hide yesterday, except for “low volatility.”

Selling was evenly distributed, and there was no sense of panic.

It's unlikely that yesterday’s session was the beginning of a regime change; it was just investors seeking shelter. But we are watching dividend yield names more closely, as bond yields come down and money exits money markets. On that note, Wall Street pros have been so wrong on quality that there will be a push for change.

Panicky

If I hadn’t been working with the investing public for four decades, I would be bewildered at the instant panic that some go into whenever stocks and other assets make even minor pullbacks after monster moves.

I got a lot of calls this week about gold, asking if the rally was over.

I still love buying the dip – but first, there must be a reasonable dip to buy.

Today’s Session

Lots of S&P names report today (31), thus far reactions have been mixed and slightly more negative than in recent quarters. The stakes are higher and many of these names have rallied hard into the release.

• International Business Machines (IBM) is getting hit on an otherwise strong report.
• Honeywell International (HON) is popping after posting solid results.

Quantum stocks are taking center stage with reports the Trump administration is looking to buy stakes. I would not chase these moves.

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