{"id":72076,"date":"2025-01-12T12:35:40","date_gmt":"2025-01-12T20:35:40","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=72076"},"modified":"2025-01-12T12:41:57","modified_gmt":"2025-01-12T20:41:57","slug":"post-election-euphoria-fizzling-with-oversold-in-sight-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2025\/01\/12\/post-election-euphoria-fizzling-with-oversold-in-sight-the-market-breadth\/","title":{"rendered":"Post-Election Euphoria Fizzling with Oversold In Sight – The Market Breadth"},"content":{"rendered":"\n

Stock Market Commentary<\/strong><\/h2>\n\n\n\n

Writing about financial markets always feels surreal when tragedy and disaster dominate the news headlines. My cognitive dissonance gets particularly poignant when the stock market does not reflect the scale and scope of events. As massive fires rage in Los Angeles causing to-date $135B to $150B in economic losses and loss of life<\/a>, writing about the fizzling of post-election euphoria in the stock market and imminent oversold conditions feels like commenting on a gnat’s struggle to fly in a windstorm. The presiding reason for the market’s weakness further emphasizes the surreal nature of the situation: an economy that remains strong enough to continue whittling down expectations for rate cuts from the Federal Reserve.<\/p>\n\n\n\n

The latest “good news is bad news” scenario came from yet another strong jobs report<\/a> that defied “expectations”<\/a> (who ARE these people making these projections anyway?) with 250,000 new jobs created and unemployment falling from 4.2% to 4.1%. Long-term bond yields have trended higher ever since the Fed first cut rates, and THAT disconnect is increasingly stark. Until the Fed’s “hawkish rate cut”<\/a> last month, the stock market cheerily rallied despite rising rates.<\/p>\n\n\n\n

Permabull Tom Lee provided a great explanation<\/a> for the market’s general willingness to ignore the bond market: the bond market is wrong. Lee called the rise in yields a “false flag” (emphasis mine): “I don’t think that this is going to be the level we see a few months from now, and I think that’s more important because ultimately if yields begin to fall, because inflation pressures are easing or if the job market is a bit softer than expected, it really puts the Fed put back in focus<\/strong>.” At least this expectation is better than Wall Street hoping for a recession to force the Fed’s hand<\/a>.<\/p>\n\n\n\n

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