Market Outlook: Mar. 4, 2021
While vol tends to sneak up on most, I can’t say that we weren’t ready for it. Something to consider in regards to commodities, is China looks to be moving into a Scenario 3 set-up.
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While vol tends to sneak up on most, I can’t say that we weren’t ready for it. Something to consider in regards to commodities, is China looks to be moving into a Scenario 3 set-up.
Following a bounce to “lower highs” overnight in stocks, we’re right back down where we closed yesterday. US ADP Employment was released this morning printing 117K vs 200K exp private payrolls released.
SPY -2.5% correction off the top, NQ -6.8% from peak to trough this morning, and the Russell 2000 -4% off the top. Here’s some perspective, The SPY is +82%, NQ +109%, RTY +144% on a y/y basis. So today is not the day to hem and haw over a correction.
Gold is struggling, Silver, Copper and Platinum aka semiconductor metals are killing it this morning – remember, Gold is a currency and vastly underperforms in Scenario 2. Not to say that we won’t come back to Gold at a later time, just not at the moment.
The steepening of the yield curve (2s/10s) has officially gone mainstream. Same thing, not a bad idea to curtail that position (but leave the core short), so we can reallocate from more advantageous prices.
If anything, the recent events of the “bear raid” of 2021, we should have gained a better understanding of the meaningless term of “valuation”.
Growth accelerating/inflation accelerating through the first half of 2021 as y/y comps of macro data and corporate earnings and profits may perhaps express the greatest rate of change acceleration since post WW2.
SPY lost 0.9% yesterday, NQ -2.4%, and RTY -0.7%. That’s right we traded down yesterday, a rare event nowadays.
Running back last week, it was a great week to be long of inflation related assets. Particularly Oil +1.6% (+17% m/m), Copper +3.1% (+15% m/m), and Platinum +2.9% taking its monthly gains to +10.4%.
The USD is now entering perhaps a “crash” phase. -10% since June, you can clearly overlap a chart of the Fed’s balance sheet expansion and the US Dollar Index from June to present and see it “gator mouth”.
Top Market Movers on Nov 11 2020: Oil, stock market rotation, USD, Bitcoin, and commodities inflation.
We’ll wait and watch to see if the IV Premiums sweat off (they already are), and turn into DISCOUNTS which is a classic complacency signal, usually coupled with an immediate overbought condition.
US Equities took a nose dive yesterday with the SPY and Nasdaq shaving off 2.8% and 3.0% respectively. Commodity prices also got whacked with Oil -4.0%, and down another 5.0% this morning.
Following yesterday’s route in global equities, we’ve got some green lit up on the board in the pre-market as US and European equities signaled immediate oversold yesterday.
The probability changed from a “risk-off” scenario – to a continuation of more “Stagflation”. That’s how we’re reading the model in the morning.
Commodities have kind of floundered since the start of Q4. Following the big “reflation” trade from June to September, the CRB Index has just chopped sideways and looks like it could roll over in Q4.
Futures Market Outlook OCT 6, 2020 for gold, US, oil, and more!
A fairly mixed bag overnight – nothing of note outside of the SP500 failing again from the top level of our range.
Last week the dollar was signaling higher lows, and a rising probability that it was going to stabilize here in the lower half of our range. That’s proving correct this morning.
Nothing substantial overnight. The Chinese Yuan did hit a 16 month high vs the USD on stronger reported Industrial Production growth.
The crash, and the BOUNCE. Be conscious of the idea that that may be “it” on the downside for now. We saw the “heart attack” drop at the 5pm open last night, and then a rally ensued overnight.
A big ramp higher in the overnight in Tech. The NASDAQ +0.90% overnight all the while the SP500 and Russell 2K trade flat.
The commodity rally is broadening vs the equity rally. Agriculture joins the mix with Corn and Soybeans +3.00% and Soybeans +0.73% and +3.2% on the week. Metals caught a strong bid yesterday, consolidating gains this morning.
Futures Outlook Aug 24 2020: Global Equities, metals, agriculture, currencies, and more!
US Futures indicating a lower open led by the Small Cap Russell 2000 Index -0.88%. Europe lower across the board, led by Germany -1.08%; France -1.09%; Italy -1.25%; and Spain -1.12%
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