Mar 2, 2021
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“It is said that good things come to those who wait. I believe that good things come to those who work.” – Wilt Chamberlain
59 years ago tonight, Wilt Chamberlain set one of the greatest records in sports by scoring 100 points in a single game against, who else, but the New York Knicks! One often overlooked aspect of the 100-point game was that Chamberlain also set the record for most free throws made in a single game with 28 in 32 attempts even as his career average was closer to 50%. The most amazing aspect of the record, though, is that it wasn’t televised and there’s no video footage. There weren’t a lot of witnesses to it either as the Hershey Arena, where the game was played, was half empty that night, and there was no one from the New York Press even at the game.
In some ways, the night of March 2, 1962, was a lot like the market and investing. It’s usually the little things that often get overlooked (like free throws) that make a big difference in performance, and the biggest moves usually come when nobody is expecting them.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, an update on major market trends in Asia and Europe, an update on the latest national and international COVID trends, including our series of charts tracking vaccinations, and much more.
Monday was an encouraging day for the Nasdaq 100. After closing out last week below its 50-day moving average (DMA), there was a decent amount of concern on the part of the bulls over the weekend. Yesterday’s rebound, though, helped to put those concerns at ease, and the longer QQQ can hold above its 50-DMA, the more emboldened the bulls will become.
Mar 1, 2021
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“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” – Warren Buffett
Futures markets are doing their best to forget last week’s decline in the equity market. Futures are 1% higher as March is certainly coming in like a bull. There’s a decent amount of good news related to the economy and COVID trends, including the approval of J&J’s one-shot vaccine. The J&J news was expected, though, so it will be interesting to see how the rally holds up once the opening bell rings. The Nasdaq 100 tracking ETF is set to open up at around $318.5 which is a bit shy of its 50-Day Moving Average ($320) so that potential resistance still looms overhead.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, Markit PMI Data, trends in unionization, an update on the latest national and international COVID trends, including a new series of charts tracking vaccinations, and much more.
Treasuries had a nice rebound on Friday, but the rally did little to dig them out of the hole they’ve dug for themselves, especially at the longer end of the curve. Including Friday’s rebound, the iShares 20 Plus Year Treasury Bond ETF (TLT) is down 9.6% over the last 50 trading days. That’s an improvement from Thursday’s reading of -12.7%, but it still ranks as one of the sharpest drawdowns over a 50-trading day period since the ETF’s introduction in 2003. Before last week, the last time the ETF was down by as much over a 50 trading day period was in December 2016 just after the election. The recent sharp downside move in long-term US treasuries has been a big wake-up call for investors, but at the same time, it has hardly been unprecedented.
Feb 26, 2021
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“We will ensure that there is no unwarranted tightening of financing conditions,” – Isabel Schnabel, ECB Board Member
Well, that didn’t take long. Just days into a market growing uneasy with the rise in government bond yields and Christine Lagarde noted that the ECB is ‘closely monitoring’ the situation in fixed income markets, Isabel Schnabel, a prominent member of the ECB tried to reassure markets that the ECB “will ensure that there is no unwarranted tightening on financing conditions”. She went on to add that the central bank would add further support to the markets if rising yields threaten to hurt growth. On both sides of the Atlantic, central bankers are doing their best to reassure markets that they will keep rates low, but for now, at least, the market isn’t so confident.
Futures have been volatile this morning and depending on when you look they may be up or down, and they are currently on the downside for both the S&P 500 and the Nasdaq. The economic calendar is busy with Wholesale Inventories, Personal Income, and Personal Spending at 8:30 AM. At 9:45, we’ll get the release of the February Chicago PMI, and then at 10:00, we’ll close out the week with the University of Michigan Sentiment Index.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, ARK Invest fund flows, economic data out of Europe, an update on the latest national and international COVID trends, including a new series of charts tracking vaccinations, and much more.
Also, Paul Hickey appeared on CNBC’s Squawk Box this morning to discuss the current moves in interest rates and what they mean for the market. You can see that segment here.
Thursday was a day many bulls would rather forget as the S&P 500 dropped over 2%, and the Nasdaq 100 fell more than 3%. Historically, declines of these magnitudes usually see a modest bounceback the following day, but believe it or not, the distribution of returns based on the day of the market decline varies widely. The charts below show the S&P 500’s and Nasdaq 100’s average next-day return (top charts) and the percentage of time each index is up (bottom charts) following days when they experience sharp declines.
When the S&P 500 declines more than 2% on a Thursday, the average next-day return is just 0.02% with positive returns 50.6% of the time. Of all the days of the week, that is the second weakest next day return and the second-lowest percentage of positive returns.
For the Nasdaq 100, it’s a similar setup. When that index declines more than 3% on Thursdays, the average next-day return is a gain of 0.05% with positive returns just 47.3% of the time. More than any other day of the week, when the Nasdaq 100 drops 3% on a Thursday, the likelihood of a down Friday is the highest.
Feb 25, 2021
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“All intelligent investing is value investing. Acquiring more that you are paying for. You must value the business in order to value the stock.” – Charlie Munger
The setup this morning is looking a lot like yesterday. Treasury yields are sharply higher, futures are lower, and bitcoin is above $50K. Yesterday, all those pre-market trends reversed themselves as Treasury yields gave up much of their gains, equities surged, and bitcoin pulled back. Will we see a repeat today?.
If lower treasury yields are what you’re looking for, this morning’s economic data isn’t likely to help much. Durable Goods Orders not only came in much better than expected (3.4% vs 1.1%), but December’s report was also revised higher from 0.5% up to 1.2%. Jobless claims came in 95K below estimates, although weather issues may have distorted that number. Lastly, the second look at Q4 GDP came in slightly lower than forecasts at 4.1% compared to estimates for growth of 4.2%.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, sentiment data out of Europe, an update on the latest national and international COVID trends, and much more.
It’s been a tale of two markets for the major US equity indices over the last week. The Nasdaq 100 and S&P 500, both of which are loaded with mega-caps, have dropped more than 1% over the last five trading days, but smaller-cap focused indices have surged more than 2%, while the less tech-centric Dow Jones is up over 1% also. Most of the index ETFs shown have declined relative to their trading ranges in the last week, and all but one of them are still at least at overbought levels. The one index ETF that isn’t overbought heading into today is QQQ, and given its recent pullback, its timing score now ranks as ‘Good’.
The reason for QQQ’s ‘Good’ timing score is the fact that on Tuesday the Nasdaq 100 looks to have successfully tested its 50-day moving average and saw a decent follow-through on Wednesday. This morning, tech is under pressure again, so watch the $319 level to see if QQQ can continue to hold the line.
Feb 24, 2021
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“Nothing is so exhausting as indecision, and nothing is so futile.” – Bertrand Russell
With Asia down overnight and Europe higher, the US is looking to break the tie in favor of the bulls as futures extend the rebound from Tuesday morning’s lows. As one might expect given the positive tone in equities, treasury yields are a bit higher. The economic calendar is light today as New Home Sales are the only report scheduled, but Fed Chair Powell will resume his semi-annual monetary report to Congress and a number of other FOMC officials are also scheduled to speak.
Powell is unlikely to say anything new this morning relative to yesterday, but with investors on edge regarding the direction of interest rates, uncertainty remains high as investors weigh the pros and cons of valuations, economic growth, a receding of the winter COVID wave, the potential for less accommodative monetary policy, and many other factors. With all these cross-currents, days like yesterday are likely to be more common.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, a discussion of fund flows from the ARKK funds, economic data out of Europe, an update on the latest national and international COVID trends, and much more.
Seasonal trends have been a tailwind for the market over the last several months, but the winds may be starting to shift. As shown in the snapshot from our Seasonality Tool, while the S&P 500’s historical returns from the last ten years over the following week, month, and three months are all positive, relative to all prior periods of similar duration, they rank below the 50th percentile.
Feb 23, 2021
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“If your only goal is to become rich, you will never achieve it.” – John D. Rockefeller
What goes up must come down. After a rough day for tech and bitcoin yesterday, we’re seeing more of the same again today, as Nasdaq futures are down over 1% and bitcoin, while well off its lows, is still down 10%. There’s not a lot of economic news on the calendar today, but we will get updates on Consumer Confidence and economic activity in the Richmond Fed district at 10 AM. Also at 10, Fed Chair Powell will give his semi-annual monetary report.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, inflation data out of Europe, an update on the latest national and international COVID trends, and much more.
Days like yesterday don’t happen very often. Even as the DJIA was up marginally, the Nasdaq finished down more than 2%. The charts below show both indices going back to the start of 1986. Before yesterday, there was only one other day since 2001 that saw a similar setup and that was last July. In the period from early 1999 through May 2001, there were 33 occurrences, and then before that, the only two other occurrences were right after the 1987 crash. Let’s just say that prior divergences like yesterday didn’t exactly occur during periods of low volatility.
While days like yesterday are rare, the way futures are positioned right now, we could see the same thing happen again today. While Nasdaq futures aren’t down quite 2% yet, they’re still down over 1.5%. Needless to say, back-to-back days where the DJIA was up and the Nasdaq was down 2% are extremely uncommon. The only four other times it has occurred since 1986 were in 2000 (4/10-4/11, 9/5-9/6, 10/2-10/3, and 12/12-12/13).
