As geopolitical tensions subside, market sentiment is shifting gears. While some investors remain cautious due to the lingering macro uncertainty, others are becoming more optimistic about the near-term outlook. The micro picture continues to improve, with equity beta returns stabilizing and technical indicators remaining supportive. However, strategists advise caution when it comes to taking large positions in either direction, as the market remains elevated and structural factors may still be at play.

Lee Coppersmith, a well-known strategist, notes that while the macro environment is still uncertain, the micro picture is improving. He suggests that investors should focus on the leadership of certain sectors and industries, while tactically protecting against potential geopolitical risks. Brian Garrett, another respected strategist, highlights the significant flows into risk assets due to improved geopolitical clarity. He notes that while some investors may be looking for new opportunities in areas like TMT and Consumer Discretionary, it’s important to remain cautious and focused on the fundamentals of these sectors.

Goldman Flows provides a detailed analysis of the current market dynamics, with their desk skewed 5% higher to buy. They note that hedge funds are evenly split between small notions in TMT and Industrials, while long-only investors are 6% better to buy. The chart of the day highlights the significant buying activity in US equities over the past week, with estimates suggesting that this community has moved from an 8/10 risk setting earlier in the year to a 3 at the lows and is now approaching a 4 risk setting.