May 7, 2021
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“Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel
So much for the ‘million job print’. While economists were expecting to see a print of one million jobs, the actual print was barely even a quarter-million at 266K. Not only that but last month’s print was revised lower by nearly 150K. In reaction, the 10-year yield has plummeted below 1.5% and Nasdaq futures are surging up nearly 200. These reactions may be a little bit too much of a knee-jerk, so we’ll see how things play out as the day goes on.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of overnight earnings reports and economic data as well as the latest US and international COVID trends including our vaccination trackers (which continue to show a significant deceleration in vaccine uptake), and much more.
Just when it looked like things were going to start getting ugly for the Nasdaq yesterday morning, it not only stabilized but reversed higher to finish the day in positive territory. It was the first time since late March that the Nasdaq was down over 1% intraday but finished the day higher. It’s always tempting to try and read into these types of moves and see them as a significant event. The reality, though, is that they are too common to be considered all that significant. In the last year alone, there have been 16 other times where the Nasdaq was down over 1% intraday but finished the day higher, and in the last ten years, it’s happened more than 60 times.
Looking back at prior occurrences over the last year and ten years, the frequency of positive returns over the next week (~62%) for the Nasdaq is just as common following these occurrences as it is for all one-week periods over the same time period. That being said, while the frequency of positive returns is similar, the magnitude of the Nasdaq’s median move following these reversals is moderately higher (1.1% vs 0.55%).
May 6, 2021
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“Chronic indecision is not only inefficient and counterproductive, but it is deeply corrosive to morale.” – Robert Iger, The Ride of a Lifetime
US Equity futures are indicated higher but only modestly so as the Nasdaq looks to avoid a five-day losing streak. The big news of the morning, though, is Initial Jobless Claims which dropped below 500K for the first time since the pandemic began.
Read today’s Morning Lineup for a recap of all the major market news and events including a snapshot of major US and international index performance, as well as the latest US and international COVID trends including our vaccination trackers (which continue to show a significant deceleration in vaccine uptake), and much more.
Remember those days earlier in the year when you could look at the yield on the 10-year US Treasury and know exactly which way the Nasdaq was going. That’s still the case today, but it’s just the opposite relationship. Whereas yields and the Nasdaq were negatively correlated for much of the year, the opposite has been the case recently where the 10-year yield and the Nasdaq have been trading in the same direction over the last four trading days. That’s the way the market works, though; just when a pattern becomes so ingrained in the minds of investors, the script changes!
May 5, 2021
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” – Henry Ford
After causing some confusion and concern regarding interest rates yesterday, Treasury Secretary Janet Yellen sought to clarify her comments after the close yesterday, and futures are attempting to rally following yesterday’s weakness in response. Leading the way higher in the pre-market, the Nasdaq is looking to regain some of its steep losses. While Treasury yields were down yesterday in reaction to commentary suggesting rates would need to rise, the 10-year yield is back above 1.6% this morning after Yellen said she was neither predicting nor suggesting a need for rate hikes.
The only economic data release so far today has been ADP Private Payrolls which missed expectations by just over 100K (742K vs 875K).
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world including Services sector data from Markit, as well as the latest US and international COVID trends including our vaccination trackers (which continue to show a significant deceleration in vaccine uptake), and much more.
After the mega-cap tech stocks couldn’t rally on great earnings last week, US equities have been struggling over the last week as the S&P 500 is down fractionally while the Nasdaq 100 has dropped close to 2.5%. Stocks haven’t just been weak in the US, though. The snapshot of regional international ETFs from our Trend Analyzer shows that the only ETF in the category that is up over the last week is the International Dividend Achievers (PID). Besides that, every other ETF is up over 1%. Leading the way to the downside, it has been Asia and Emerging Markets which have declined over 2%.
As a result of the recent weakness, we’ve certainly seen some cooling off in the boil we had been seeing. While the vast majority of ETFs in the category were overbought at this time last week, every one of them with the exception of PID is now in neutral territory.
May 4, 2021
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“As society becomes more and more complex, cheating will in many ways become progressively easier and easier to do and harder to police or even understand.” – Vitalik Buterin
Equity futures were mixed up until about an hour ago with the DJIA indicated to open higher while the Nasdaq was lower. Shortly before 8 AM Eastern, we saw a leg lower with the Nasdaq leading the way and now down closer to 1%. Oddly enough, while one might expect the weakness, especially in the Nasdaq, to coincide with a tick higher in rates, yields on the 10-year actually dropped below 1.6% as futures moved lower. In the grand scheme of things, this isn’t a major move, but it does mark a continuation of the trend of weaker breadth we have seen in the Nasdaq lately that we discussed in last week’s Bespoke Report.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers (which continue to show a significant deceleration in vaccine uptake), and much more.
Moving from the equity market world to the crypto world, just when the general public was finally becoming familiar and comfortable with bitcoin, ethereum has taken the spotlight. While bitcoin has essentially moved sideways over the last 2+ months, the price of ether has practically doubled. Following the divergent performances, the relative strength of ether versus bitcoin has surged in the last several weeks to the point where ether is actually outperforming bitcoin over the last three years.
Looking at it another way, the ratio of bitcoin to gold has plummetted. Back in September 2019, the ratio of bitcoin to gold peaked out at 61.1. Then around the March 2020 equity market lows, the ratio had shrunk to just under 50. Through yesterday, the ratio has now been cut by two-thirds since March 2020 to 17.5 – the lowest level since the summer of 2018.
Compared to gold, ether’s value has surged. At the start of the year, ether was worth less than a half-ounce of gold. Yesterday, it was worth nearly two ounces of gold! Talk about a rally.
May 3, 2021
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“Time is the scarcest resource and unless it is managed, nothing else can be managed.” – Peter Drucker
As hard as it may be to believe, your calendar is right; it is May, and 2021 is already a third of the way behind us. If you feel like time has gotten away from you, don’t worry, there are still eight months left. From the market’s perspective, the first trading day of May is looking a lot like the first day of April which looked a lot like March which looked a lot like February. All three starts to those months came with heavy buying as the S&P 500 was up over 1% all three times! Futures aren’t quite that strong this morning, but the S&P 500 is indicated to open higher by half of one percent.
On the economic calendar, the major report of the day is the ISM Manufacturing at 10 AM. Economists are collectively expecting a level of 65.0 versus March’s reading of 64.7 which was the highest level since the early 1980s.
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
We highlighted it in this week’s Bespoke Report, but we wanted to show again this morning how strong economic data was in the month of March. In our Matrix of Economic Indicators each month we summarize the y/y change in more than 30 different economic indicators and highlight whether they are showing positive or negative momentum versus their prior month’s y/y reading. We also track the net number of indicators showing positive momentum on a monthly basis over time.
For the month of March, only one of the economic indicators in our Matrix showed negative momentum while the remaining 35 all had positive momentum. While we’ve seen a lot of strength in the number of indicators showing positive momentum coming out of the pandemic, we have never seen anything nearly as strong as March’s net reading of +34. While March was exceptionally strong, the combination of a bounce back from economic weakness in February due to winter storms, tons of stimulus, and easy comps relative to March 2020 makes it unlikely that this degree of positive momentum will be matched again.
Apr 30, 2021
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“No man’s knowledge here can go beyond his experience.” – John Locke
Well, we have almost made it through what has in many cases been the busiest week of the year. Between the busiest week of earnings season for the S&P 500, a lot of economic data, and an FOMC decision, there was no shortage of catalysts this week, but there was little downside associated with any of them as equities- at the index level- continue to defy gravity. Not only have we made it through a busy week, but 2021 is already a third over! Time flies when you’re having fun!
Read today’s Morning Lineup for a recap of all the major market news and events including the biggest overnight events, some key earnings reports, economic data from around the world, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Heading into the week, investors were on edge with the looming earnings reports from the S&P 500’s largest companies all coming in the same week. Expectations were already high, but were they too high? While not all of the major companies reporting impressed investors, the major equity indices have made it through the week unscathed. While equity futures are indicated lower this morning, every major index in our Trend Analyzer has seen positive returns over the last five trading days and in a number of cases big gains.
This week’s performance has been mostly contingent on market cap- the smaller the better. The top-performing index over the last five trading days is the Russell Micro-Cap index (+3.56%), while the Dow is the only index ETF that is up less than 1%. In between those two extremes, market cap has clearly played a role in performance with small caps performing best and large caps doing not as well. That’s basically been the story when it comes to YTD performance as well, although, towards the end of Q1, we saw the opposite trend play out. Ironically, even though the Micro-Cap ETF is the top-performing ETF over the last week and YTD, it is the only ETF that isn’t overbought, and it’s actually just barely above its 50-DMA.
