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“Complacency often afflicts precisely those who have been the most successful.” – Andrew Grove
With a gain of over 12% already, the Philadelphia Semiconductor Index (SOX) is off to a good start in 2021. The chips are going to be giving some of those gains back this morning, though, as stocks like Intel (INTC) and Seagate (STX) are both trading lower in reaction to earnings. The weakness in those stocks is dragging down the entire sector, but it’s hard to get too upset about the weakness when the SOX will still be hanging on to double-digit YTD percentage gains at the open.
For the broader market, it’s also looking like a weaker open as S&P 500 and Nasdaq futures are both lower while Treasury yields move lower. The main driver is weak economic data out of Europe stemming from virus restrictions in the region. Elsewhere, the week can’t end soon enough for bitcoin which is down more than 13% from last Friday’s levels.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, flash Markit Manufacturing and Services data for January, an update on the latest national and international COVID trends, and much more.
While the magnitude of the gains varies, the picture for major US indices looks the same across the board. Markets are short-term overbought. From the S&P 100 and Nasdaq 100, which are both at extreme overbought levels following big rallies in the mega-cap stocks, all the way down the market cap spectrum, every index ETF heads into Friday with gains over the last week putting them all at least one standard deviation above its 50-DMA. While the big picture at the index level looks pretty uniform, underneath the surface, the gains haven’t been near as uniform. Within the S&P 500, YTD returns for individual sectors range from a gain of 11.6% for the Energy sector to a decline of 3.3% for Consumer Staples. So, depending on your level of success, stock-picking has either really helped or hurt performance so far this year.