Navigating Market Trends: Insights on the Bullish Momentum and Tariff Impacts

Well, let's get to the big story breakdown.

US stocks initially struggled after the holiday weekend after the Nasdaq and S&P 500 hit new records last week, and this also came as investors digested a flurry of trade announcements from Trump.

Now markets are eyeing headlines as Trump doubles down on his August 1st tariff deadline, saying no extensions will be granted.

The tariffs to be less harsh than Trump's initial threats.

Well, this morning we are looking at stock features inching higher and nearer to date, the S&P 500 is up 6%.

Well, joining me here at the New York Stock Exchange to weigh in on whether the bullish trend in stocks is still intact is Mark Newton, managing director and global head of technical strategy.

At Global Advisors.

Mark, good morning.

So great to have you here today.

Well, first and foremost, tell me whether we're out of the woods right now when it comes to the bullish trend.

Is it still intact?

Well, the bullish trend is very much intact in my view.

Technology has rallied back almost 30% in the last three months.

That's very encouraging.

So markets have hit new highs, and we've actually done so on a broadening out of breath.

That's very encouraging for investors to see the S&P and Nasdaq hit new all-time highs while we're seeing increased relative strength out of groups like financials and industrials and discretionary, you know, before it was really just technology in the month of May, but now that's.

Starting to broaden out, so I'm very encouraged.

The issue is that we have gotten a little overbought in the near term.

We are nearing levels that likely could give way to some maybe a pause in the month of July, but I don't suspect it'll be more than 2 or 3% before we push up into August, and August is really the main month of concern.

August and September.

Uh, sentiment is gradually getting a little bit less bearish.

That's something for investors to concentrate on.

People are still wrangling with what is the end game for tariff negotiation, and nobody really knows the real answer for that.

But it's been proper to really ignore that and focus on the economy, focus on earnings and really the rebound in the broader market that's helped momentum, helped breath.

At a time when really still a lot of people don't want to believe, but they're gradually starting to, you know, play catch up and feel like this FOMO, there's a need to really jump on this rally to really help with their year-end performance.

Yeah, and a lot of key indicators that you're paying attention to, especially when it comes to the technicals.

So what are we seeing when it comes to the technicals right now?

Well, it is important to see all indices start to rally back into all-time highs.

We haven't seen that yet, and so there is a little bit of divergence now.

So the eco-weighted S&P is still lagging.

We see the Dow Jones Transports and the Russell lagging to really have conviction for The next year we want to see all of those pushed back to new highs.

I'm not sure that's going to happen in the fall, but RSI, for example, right now is above 70 for the S&P, so we're getting a little bit stretched in the near term.

I'm very encouraged though at Weekly Momentum having turned positive, just the broad-based nature of the rally and the trend.

At a time when people have been in disbelief, it is really, really important.

The dangers that I see are sentiment gradually getting more optimistic along with just overbought conditions, along with just, you know, heading into a time in the next week.

I think that historically some of my cycles start to show a little bit of skittishness.

So I'm bullish, but yet, you know, I do think there are opportunities abroad.

I also think it's important to watch.

Happening with treasury yields, we've seen a massive breakout in yields across the curve as the economy, the economic data largely has come in better than expected, and there's worries about fiscal uncertainty.

So we've seen that long end of the curve really start to inch up.

And if we see a move over 470 in the 10 year, that could finally spook the market at a time when people are fearing inflation, but we haven't really seen any inflation to speak of.

So interesting dynamic for sure.

Yeah, and a lot going on under the surface and as you mentioned, we'll get inflation numbers out from the US next week, so we'll be paying close attention to that.

And we know that the US central bank is paying close attention as well.

So you mentioned what's happening abroad and when we take a step back and look at the boss overseas, we are seeing aid outperformance compared to the activity here in the US.

So what markets in particular are you paying attention to?

Well, we saw about 4.5 months of our performance overseas and then recently, the mag 7 has come back to life and so a little bit of a bounce in the US compared to the rest of the globe, but I particularly like areas like India, like Mexico, actually China.

With the dollar really showing a lot of force to the downside, it's almost become a consensus trade that the dollar has to go lower that gels with actually Powell and Scottpacent's plan to try to help the dollar go lower, to help exports at a time when, potentially tariffs could affect the deficit.

So we want to see.

Ironically, that the job owning of the Fed is certainly not helpful.

We want the Fed to have their independence, but at the same time that accomplishes the Fed's goals for it as a form of monetary stimulus as the dollar, as yields come down to help to refinance the debt.

But the real key in the near term is, you know, how high do interest rates go.

I suspect it's going to be short term before we roll over and whether it be based on I don't lack of inflation.

I don't know, but it's really everybody's saying inflation inflation, but at the same time we've really seen not much evidence of that to really support that.

Yeah, and it's very interesting because I think we need to take a look at what's happening on the courtesy front as well as emergency emerging markets as well as developed economies when we're looking at the performance for the equity markets.

But last but not least, before I let you go.

Tell me what's happening when it comes to momentum and what you're looking at when it comes to sectors for leaders and laggards within the S&P 500 for the second half.

Yeah, momentum has been really encouraging the last two months.

There was some worry on the initial balance that we would not be able to carry back, but the fact that technology has powered through is a positive.

Momentum is actually getting stronger overall, just given the fact that financial discretionary industrials have all.

Back at a time when staples have been quite weak.

So that's really what you want to see in sort of a risk on environment.

So I look at things like, for example, RSI and MacD for momentum type trend following, but in the short term we've seen a little bit overbough conditions, but overall trends are in good shape.

I'm hopeful that we can see equal weighted S&P push back to all-time highs.

That would be very encouraging.

So leadership is going to be financials, I think.

The talked about community banks.

We want to help the banks with the deregulation, change the rules of Basel III.

We want to initiate that here in the states and not farm it out abroad.

So that frees up a lot of liquidity and lending power for the small banks, which will be very, very they can help to juice the economy if they want to.

Let's not kid ourselves.

So they can take, you know, the debt and finance it on the cheap end of the curve and free up the balance sheets of these banks, and it's actually a very, it's a very encouraging thing at a time when many people remain very skeptical.

Yeah, and Mark, while I have you here, I do want to ask you, since the last time you were here, the big beautiful bill has passed.

So what does that mean for the US economy?

Well, you can take either side of that depending on your political lean, but arguably, you know, I think we're all hopeful that that can be, you know, really helpful towards continued tax relief that I think the middle class and, you know, most of us need to really keep the economy going.

You know, it's tough to argue all the nuances.

There's a ton of different parts of this, but I remain optimistic.

I think there's obviously an issue about, you know, continued spending.

Will those mandatory spending cuts offset the degree that they're saying we're all being told that the deficit is going to rise based on this, and There's a lot of debate with regards to that.

There's no clear answer, but I think Scott Passon is very clear on his plans on how to lower the deficit.

So I think it's right with him at the helm of the Treasury to be very encouraged that, you know, it's probably less negative than a lot of people are viewing it right now.

OK, Mark, always great to have you here on the show.

Thank you so much for joining me.

Thank you.