October 17, 2024
Good morning,
Momentum is an important factor in the calculus explaining the price fluctuation of securities in the public markets. In market analysis, momentum is a nebulous concept; it is physics (mass x velocity) applied to an emotional structure (public markets). Nevertheless, when a broad portion of a market rolls in one direction, that momentum will blow right through many obstacles. For the equity market today, positive momentum is what’s pushing indices up and over a wall of worries. It appears that another worry is being rolled over this morning – technology in general (NASDAQ) and semiconductors specifically are set for gains this morning on results from Taiwan Semiconductor. The market has largely dismissed ASML Holding NV’s lowered 2025 guidance and the White House’s early-in-the-week proposed limits on semiconductor sales (a trial ballon, but still…).
On Monday, I suggested that the “Trump trade” is supporting markets. Yesterday from Stan Druckenmiller (and he’s not a Trump fan) was quoted: “During the past 12 days, the market has seemed very convinced Trump is going to win. You can see it in the bank stocks, you can see it in crypto.”
The market rule “Don’t Fight the Tape,” is just another way of saying don’t fight momentum. It will keep running until it doesn’t.
Hope you have a good weekend.
Be well,
Mike
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