The market walked into today still buzzing from Powell’s comments yesterday that knocked equities off balance. Liquidity remains the driving force, but a reminder—valuations don’t matter until they do. Momentum is still in control, but cracks are where opportunity hides.
Key Takeaways
Liquidity remains the kingmaker
- The S&P and Nasdaq continue to ride above the 8- and 20-day moving averages, proving just how strong liquidity flows are.
- U.S. equities now account for 72% of global capital flows—when the tide is this high, even overvaluation doesn’t matter.
Defense stocks offer tactical setups
- Names like Lockheed Martin are classic examples—when they hit oversold RSI/MFI territory, spreads to the downside become high-probability trades.
- Sellers exhaust, probabilities favor the rebound, and patient entries matter.
Lithium and oil in play
- LAC popped on U.S. government interest in taking another equity stake. The trade isn’t chasing momentum—it’s looking for disciplined spreads at lower levels.
- Meanwhile, oil got a push from OPEC supply cuts and inventory drawdowns. Watch Exxon and Chevron as they approach overbought zones; profit-taking tends to hit hard when RSI/MFI peak.
What I’m Watching
Momentum screens are flashing strength in semiconductors, AI names, and biotech—no surprise given how liquidity is flooding these spaces. On the other side, defensives and consumer staples keep bleeding, weighed down by debt and lack of rotation interest. The key tells will come from Boeing and energy—whether momentum holds or fades at overbought.
Markets are burning higher, but gravity never goes away. When liquidity shifts, the move will be fast, and the real opportunities will be in how quickly you pivot. Stay sharp.
Until next time,
Garrett Baldwin
TheoTRADE