US stock markets opened strongly to the upside, led by a 1.1% rally in the Russell 2000, but there are signs of fatigue setting in. The Nasdaq opened higher but is now down 0.1% as shares of Nvidia fall 1.4%.
It's been a one-way market since the election and Trump trades -- like Tesla -- are flying. I'd argue that it's not real money that's chasing it here but retail piling in, which is a red flag. The thing is, there is all kinds of money parked in money-market funds so there could be plenty more to come.
Seasonally, it's a very strong period and that continues through year end. For money managers that were cautious this year, there will be tremendous pressure to pile in and recover. That all sets up for a bit of a reckoning early next year, particularly if the Fed and/or the bond market spoil the party.
The Treasury market is closed today so there is no signal there but yields turned lower late last week and that's helped to keep sentiment buoyant.
