The S&P 500 was very strong in April. However, I suspect May won’t be as easy for the bulls.
S&P 500
The S&P 500 has been on an absolute tear to the upside during the month of April. But as we're starting to get close to the month of May, we have to ask questions about the possibility that sustainable moves are going to be difficult to hang on to in this environment. After all, interest rates are higher than they generally have been in a while and of course we have a lot of concerns when it comes to the Middle East.
The noise coming out of the Middle East continues to cause a problem but as we got towards the end of April, something even more concerning for the S&P 500 has come to light. And that's been the fact that Sam Altman from OpenAI has said the quiet part out loud, meaning that he is talking about the data center spending out there is just unsustainable. In fact, most data centers have not actually been constructed yet and it looks very much like a bit of a bubble.
Sustainability of Artificial Intelligence Spending
Maybe everybody got ahead of themselves and unfortunately for Wall Street, the whole story's been artificial intelligence as of late. In fact, this is starting to look very much like the dot-com boom in the past where everything took off, collapsed, and then once actual businesses came to fruition, we started to see a rally. I don't know if it will be that drastic, but the thing is if we start to lose the artificial intelligence boost, that will be a major problem.
That could send this market looking towards the 6,800 level rather quickly. And even if we do, it's possible that is what we need for longer-term moves to the upside anyway. I am bullish of the S&P 500 longer-term, but I also recognize that the month of April was well overdone and that could cause some noise in the month of May.
I do believe buying on the dip will continue to be the way forward, but I also recognize that you do not have to be the first trader into the market when it does drop and bounce. You just simply have to follow the overall momentum.