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“Too many people miss the silver lining because they’re expecting gold.” – Maurice Sendak

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

There have been some positive developments in the US-China trade talks as Commerce Secretary Howard Lutnick said that both parties agreed to a consensus in trade talks that now only have to be agreed upon by President Trump and Xi.  The President just truthed that the deal is ‘done’. Despite the positive headlines, futures have been drifting lower as the terms of the deal really only bring us back to where we were after the Geneva meeting, so this drama is anything but done, even if things are moving in the right direction.

Markets are also a bit anxious heading into the release of the May CPI report. Will this be the month that the impact of tariffs starts to show up in the data, or will we once again hear that it’s a ‘next month’ story?

The S&P 500 closed within 2% of an all-time high yesterday, and overall breadth has likewise been strong. Let’s start with the cumulative advance/decline. The S&P 500’s cumulative A/D line has already hit a new high since “Liberation Day”, and after a brief dip in late May, it has rebounded right back within a hair of its high. If the market takes out its February high, it would be good to see breadth confirming the move.

One big contributor to the strong breadth in the market is the Technology sector, which has already taken out its late May high in the last few days, reaching a new high yesterday.

While the S&P 500 and Technology have seen new highs in terms of breadth as they wait for new highs in price to follow, the Industrials sector has been the opposite, as price has already made a new high, while breadth remains just shy. Back in late May, the sector’s cumulative A/D line just barely missed making a new high, and after a brief dip in late May, is now back on the rebound as it looks to take out those highs once again.