'Irrational exuberance' - is back in the lexicon of analysts, worrywarts and a few pundits. Most fail to distinguish how it's primarily just the usual suspects in mega-cap areas and yes you could have a spike, reversal (possibly triggered by an event, whether it be geopolitical or something else) and yet resume the upside as the Spring evolves. The rising skepticism has helped the S&P push.

Freepik

Sectors like Semiconductors, Healthcare, Energy or basic investment core holdings get interesting on pullbacks, while the problem on Wall Street tends to emphasize 'cheerleading' or just recommendations to clients to chase stock trends 'after' they have matured. Doesn't mean they can go higher, but just as you've seen in some healthcare and semiconductor stocks, the vertical thrusts tend to welcome almost-equally distressing selloffs, even if higher prices later.

Bifurcation hardly corralled - by S&P's heady rush to records. A distinction between the mega-caps and broad market has persisted for a couple years at least, and it's an end to the lagging of the overall market that make new highs a bit of yawn. Plus the January Expiration was 'the largest' and there's a clear tendency of money managers to try to elicit more gains from what they own.

Incidentally we're close to the 'window' ending for rotating buyback moves for a slew of big-caps, so that too can provide further stock boost for the 'actual' Index, with broadening needed for 'real' investment gains. All this is part of the ideal S&P pattern we looked for from mid-January into early-mid February, of course after anticipated 'stumbles' in earlier January largely as tax-gain sales.

But aside the global challenges on the military and terrorism fronts, there's an interesting aspect of the negative stock market in China, which portends more struggle for 'their' citizens, hence a desire to attract business and facilitate the resumption of trading flows to Europe, hence pressure by China 'on' Iran sort of encouraging that they 'chill' supporting proxies or at least avoid war. Mostly speculation on my part, but makes sense as nobody has more cargo going to the Red Sea (transiting the Suez Canal) or tankers coming from Persian Gulf.

I also suspect that Iran has attacked Pakistan, an Indian tanker and multiple targets in Iraq, plus much support to their proxies, possibly as efforts to force the U.S. Navy to redeploy assets to various distant parts, reducing the ability to 'concentrate' warships in the Red Sea, thus inhibiting stopping the Houthis. Today The White House acknowledged a prolonged engagement there, which they won't call a 'war', but is. And probably ends whenever there's a ceasefire in Gaza, which is unlikely until the hostages are released, or Hamas gives up.

Market X-Ray: 

The S&P swung too-and-fro to hold record highs, ahead of a few economic reports, and a late month Fed Meeting ahead too. And we will get a flow of earnings reports, which will be mixed, ditto guidance.

'Probably' goes nowhere, but today's proposal by Israel indirectly 'to' Hamas, for a 2-month ceasefire in-exchange for total hostage release, would likely be welcomed by the markets (and Oil prices dip, along with 'possibly' Yemeni Houthi attacks squelched too... pressure from China exists too). Impossible to say if the Israeli proposal gains traction, but if Hamas responds with modified variations of that, such as with a wider Israeli prisoner release, then perhaps.

Meanwhile U.S. and U.K. aircraft and submarines launched against targets in Yemen again Monday night.

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Market Briefing For Monday, January 22
Market Briefing For Thursday, January 18
Market Briefing For Wednesday, January 17