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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.