Senior market strategist Michael Reinking joins the show from the New York Stock Exchange to break down the latest market action, highlighting rising intraday volatility, sector rotation trends, and key technical levels investors are watching. He explains how options expiration, geopolitical tensions, and shifting sentiment have driven recent market swings, with defensive sectors like utilities, energy, and industrials gaining while tech and consumer discretionary lag on risk-off days. Reinking also discusses how last week’s “AI disruption” sell-off across industries from software to financials has begun to stabilize, though markets remain sensitive to incoming data, particularly the closely watched PCE inflation report favored by the Fed. He notes that traders are also focused on potential headlines from the Supreme Court of the United States regarding tariff-related cases tied to the Donald Trump administration and companies such as Costco. Technically, he points to a tight trading range that has defined markets this year, with downside support near recent lows and the much-anticipated 7000 level on the S&P 500 serving as the major upside milestone investors are eager to see breached.
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All right, Michael Reinking, good friend of ours here on the show, senior market strategist here at the NYSE.
What are you seeing across the indexes with a specific eye on volatility as of late?
Thirsty Thursday, which is a little tease for some guests coming up later in the show.
For those of you in the entertainment industry, well done there, Michael.
But you know, look, it's been a festive close here as you know we had mortgages close a little bit lower today, but you know with that gold medal win, you know, the vibes have picked up a little bit, you know, today. see we broke two consecutive weeks where the S&P 500 fell over 1% on Thursday, so we kind of broke that streak today, but we have seen kind of volatility picking up throughout this week, especially on an intraday basis, right?
Part of that is related to the fact that we have options expiration tomorrow, right?
So with that options expiration, you'd expect to see volumes and volatility pick up, especially around the open and the close tomorrow morning and into the close tomorrow.
That's kind of driving some of that intraday volatility and you have the VIX which is hovering right around 20 as we have the geopolitical concerns of bubbling back ask you about rotation a little bit more broader rotation on a day like today, it rotates into utilities, energy industrials.
We have the risk off day whenever tech and discretionary are kind of the laggards on the S&P.
What have you seen more broadly in terms of those those risk off rotation days when investors say we take some profits off the top heavy stuff and we're going to look for some other names to put our money.
So we've seen a pretty broad rotation throughout this year, right?
And you know if you kind of take a look at it, this week has actually been a little bit of a counter trend move, right?
So you know last week was all about weakness in areas of the market that were being, you know, perceived to be disrupted by AI, right?
And it was like that AI wrecking ball made its way throughout the market software, financials, you know, into insurance companies.
We're seeing some of those companies, you know, kind of start to bottom out.
Try to find a bid this week.
You know it's a little bit like the outside, right?
We had this AI winter last week.
It's thawing outside.
We're seeing a little bit of a thawing of that within the marketplace this week.
Yes, of course we're only ever just one data point or one trading day away where suddenly we're rocked right back to reality on the AI trade, whether or not we want to, to the point of economic data, PCE inflation print tomorrow.
I mean this is the big one for the Fed.
We say CPI is important, PPI is important, but if the Fed has a favorite one, a favorite child.
Of the three inflation prints, it's the one we get tomorrow.
It is, it is PCE is typically the important one.
Now that is a December reading, so it's a little bit dated this time around, right?
So I think actually potentially the biggest catalyst tomorrow outside of options exploration is that we have the first opinion day from the Supreme Court after the after their recess is up.
So we could potentially get you some headlines around tariffs in the morning, those start to come out at around 10 o'clock, so everybody's going to be glued to their.
Yes, of course the latest on IEPA, of course, emergency Economic Powers Act out of the administration.
Did the Supreme Court side with the Trump administration or against them?
Big box retailers like Costco are involved in all that litigation.
I've got less than a minute left.
Any other technical levels you're following to finish the day at 68, 61.
Still waiting to bust out those S&P 7000 hacks, kind of really interesting.
So if you look at where the S&P 500 has been, we've been in about a 200 point range pretty much since the start of this year.
This week we've been ping ponging back and forth between the.
100 day moving average and on Monday morning we tested the late January early February lows at 6780 in the S&P 500.
So that's kind of the key level in the short term to kind of watch to see if we get any more downside.
Clearly 7000 is the number to watch on the upside.
Yes, we've got the hats ready.
They're in the boxes down here.
We have to close.
We can't just hit an inch a day.
We've got to close at 7000 to bust out the hats.
The great Michael Reinking on this gold medal winning edition of the show.
That was really exciting before the bell.
Thanks for having me.