There's an old Wall Street saying: "The amateurs trade the open, the pros trade the close." And, yes, there does appear to be some correlation between how the market, on average, trades during the day and its overall present state.
While we opted not to put any new capital to work today, we were keenly interested in how -- on a day when geopolitical rhetoric saw global stocks sell off, and bonds and gold rally -- the market would finish up. Or, how the "smart" traders see things.
Here's the chart:
click to enlarge...
And here's a look at the past 10 days:
Note: Only one of the last 10 days saw the market sell off markedly into the close. The other 9 late-day rallies suggest that, for the moment, the "smart" money remains bullish.
Ironically, Bespoke Investment Group (an important source of data and research for us) happened to be looking at the same stuff. After today's close they posted the following composite intraday chart for the S&P 500, broken into two time periods: Year-to-date through June 9th (blue line), and post June 9th (red line). Their research shows this late-day bullish action has been prevalent throughout the year.
They also did the same for the Nasdaq. And while since June 9th the Nasdaq's late-day action isn't as encouraging as the S&P's, the essential holding of the mid-day bounce (after the supposed amateurs sold the open) into the close would not be an indication of bearish sentiment:
Now, all that said, while intraday trends can be instructive, they're just a sliver of the data that thoughtful analysts take into account as they assess the present state of markets. Things forever evolve, trend, and change course over time, and, thus, we have to stay open to all possibilities.
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