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“I’m the fellow who takes away the punch bowl just when the party is getting good.” – William McChesney Martin, Jr.
Investors got the first hints of the punch bowl being taken away in the post-COVID world last Wednesday, and they haven’t taken it well. The Dow was down every day last week which was the first “o-fer” an entire week the index has experienced since February 2020 just as the COVID crash was getting underway. Bulls are attempting to regroup this morning after last Friday’s plunge with all of the major US indices trading higher in the pre-market, but it’s still early. The economic and earnings calendars are light today with the only economic report being the Chicago Fed National Activity Index missing expectations (0.29 actual vs 0.70 forecasts). While quiet on the data front, there will be plenty of Fedspeak to contend with.
Read today’s Morning Lineup for a recap of all the major market news and events, the latest economic news from around, a discussion of elections in Europe, South Korean trade data, and the latest US and international COVID trends including our vaccination trackers, and much more.
Last week was a rough one for most sectors, and the most damage was done in cyclical sectors. Materials, Financials, and Energy were all down over 5% while another three sectors were down over 3%. The only sector to successfully swim against the tide was Technology which managed to trade up a mere 0.08%. In the wake of last week’s decline, no sectors are overbought, four are oversold, and one (Utilities) is at ‘Extreme’ oversold levels.
As mentioned above, Technology was able to buck the trend last week and finish the week higher, and because of that the Nasdaq 100 remains just shy of record-high levels. The S&P 500, meanwhile, doesn’t look nearly as strong as it closed below its 50-DMA on Friday for the first time since March 8th. These two indices are both telling different stories.