Market Crosscurrents
Several forces are pulling against each other today. Oil is falling while the 10-year yield is rising - a tug-of-war with the market close to unchanged.
Today is triple witching, when stock options, index options, and futures all expire at once. This brings much bigger trading volume. Do not read too much into it beyond the volume itself, which must be worked through all day. Of the forces fighting to drive the market, volume from triple witching is the most likely to win, though many news headlines and geopolitics remain in play.
Crude oil is behaving well. It dropped back below $100 and reached below $95 overnight.
The 10-year yield had been down but drifted back higher. The Bank of Japan likely has something to do with that.
Volume and the S&P 500
Volume matters because for a couple of weeks the S&P 500 (SPX) showed only small moves. Before the prior two days, there had been no 1% move since much earlier in the month. A move that size signals institutional flows and real strength, up or down. For a continuation of yesterday's gain, the bulls need confirmation.
Bank of Japan Rate Hike
The Bank of Japan raised rates from 1% to 1.25%. That is low compared with the US and other places, but it is the highest level in 31 years. Japan had been fighting disinflation and is finally coming out of it, easing rates a little higher to keep a cap on inflation. The BOJ raising rates may be putting upward pressure on the US 10-year yield because of the comparison between the two. Watch Japanese rates and the 10-year yield on this move.
Warren Buffett Steps Down
Warren Buffett is stepping down as chairman, saying "Father Time always wins." The move was abrupt and sudden, which is a bit alarming - hopefully nothing is going on with his health. He had already retired, but this is a larger transition out of leadership roles at Berkshire Hathaway (BRK.A/BRK.B). He is 96 years old. A sudden move out of a role by someone that age is concerning.
His track record is strong: a compounded annual return of almost 20%, nearly double the S&P 500 over his tenure. Berkshire has long had clear succession in place, with Greg Abel groomed to take over.
Every trader carries Buffett's sayings and ideas in their head daily. He is the Michael Jordan of trading - no one has done it better, and he did it his own way without bowing to pressure from anyone, with his integrity intact through a full career. It has been a historic run, and there will never be another like him.
