The bias remains to the upside - although it's like 'pulling teeth' to extract a lot better breadth participation, where it would have more meaningful impact. Perhaps that's a sign of disbelief and plays-out in a contrary (thus favorable) fashion, in the course of more-overall (than just S&P) move into the Spring.

   Freepik

Thursday brings what should be a favorable GDP number, which politically is obviously to be used in predictable ways, but that is less relevant than proving what I've contended for a year: 'softish' landing, not to hard, not collapsing. It's almost essential to justify multiples in many cyclicals and mega-cap techs, but of course many of the leaders are already at lofty elevations. The opening of a so-called 'buyback window' has been described as helping them, for now.

The entire backdrop has remained bifurcated, almost regardless of low, high, or lateral interest rates. Small-caps should rally more with rates on the decline while certain stocks aside mega-caps (such as in Housing) typically would be lower not higher during the higher rate environment and higher with softer Fed (rate) policies, presumed unfolding.

A lot of interesting phenomenon but this is the first month of an Election Year as well as the start of a 'buyback window' which should provide strength... let's say for the short-term and help the market's presumed optimism into Spring. I suspect 'affirmation' of lower rates (but not truly 'low' rates) will be sufficient to spark interest in smaller caps, where there's innovative disruption, not merely because they're small or rates are friendlier. Actually, the economy is adjusting to 'this' rate environment, which needs to not be too high... or too low again.

Market X-Ray: 

There are lots of issues out there, geopolitics at the helm, not so much profits. For-instance (and partially thank or blame AI for the backdrop in which) IBM will cut jobs while talking favorably about their outlook.

There's no change in our outlook regarding this reluctant S&P extension. S&P mostly filled the upside gap from Wednesday's opening, and should fill more of it early Thursday, and then try for a rebound, but it time to struggle more.

Last night I shared a regional Middle East map showing Iran's tentacles trying to mess with neighboring or regional players, probably to force the U.S. into a shifting of naval resources war and wide (for instance a cargo ship today was hit despite a U.S. Navy destroyer escort). It remains a dangerous situation.

In a subsequent engagement: terrorists fired 3 anti-ship ballistic missiles from Houthi-controlled areas of Yemen toward the U.S.-flagged, owned & operated ship M/V Maersk Detroit, transiting Gulf of Aden. One missile impacted in the sea. The two others were successfully engaged and shot down by the USS Gravely (DDG 107). There were no reported injuries or damage to the ship.

But Iran might need to worry too, since the U.S. is getting bolder (finally?) with responses to their supported militia attacks on our Forces in Iraq, Syria and in supporting Hezbollah, the Houthis and Hamas... Tehran should feel stretched. At the same time more cost-effective interceptor systems need rolling-out to our Fleets, since the high cost of 'Standard' or 'Patriot' missiles isn't realistic in the long run, maybe against ballistic missiles, but not basic drone attacks.

Speaking of Iraq, China trying to negotiate operating a transportation network 'in' Iraq (and shipping port) is interesting and would 'wiggle' them into the Gulf (Persian Gulf) Western areas around Basra, possibly in-order to ship Oil from there incidentally. This is unlike China's base right next to the US Navy's base in Djibouti, that I've occasionally mentioned, and is at a more strategic point.

Elsewhere Tesla (TSLA) 'sort of' missed numbers, cautioning that shifting into their next-generation models in 2025 will be 'challenging' to quote Elon Musk. And the FAA is going to allow Boeing 737 Max 900's to fly after inspected/fixed, at the same time the FAA is halting Boeing's (BA) planned production expansion plan.

On the surface that sounds like no future order fulfillment, but that's not what the FAA said (though some would say they should). It means 'no production' until the FAA is satisfied quality control issues uncovered are resolved.

Bottom-line: 

Another record S&P Close eked-out, but not broad and not very impressive. This remains a market about ready for a hiccup or even clearing of its throat a bit, then perhaps paving the way for broader participation.

For now, I do expect more big-cap profit-taking, but unlikely to see any big rise or disastrous plunge, barring a major financial or negative geopolitical event. I say it that way since there could 'in theory' be a positive global development. I think it may depend on how fast things get resolved (not so far), versus pace of economic fallout in Europe and even here from the Red Sea 'turmoil'.

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