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Market Outlook: Feb. 23, 2021

RJO Futures

Contributor:
RJO Futures
Visit: RJO Futures

By:

Senior Asset Manager

Top?  Have we found one?  Perhaps.  Doubt it.  This week is the 1yr anniversary of the pandemic crash, how endearing for the market to be serving up losses this morning.  None of this matters to me, we’re going to continue to look for oversold pull backs to buy for now – as we remain in Scenario 2. 

I’m not in the business of calling tops and bottoms, I used to think I was that smart…and believe me, that’s not a good approach.  More money has been lost betting against this market vs. money lost during the drawdown periods.  Tops are processes, not exact points in time.  If this 12 month market melt-up is coming to a halt for the intermediate period, there’s going to be plenty of dips to be bought and rally’s to be sold along the way the Scenario 4 in the back half of the year.  And to be perfectly honest, even to be discussing a market “top” is an arrogant thought to be holding at the moment.  Continue to look for oversold levels to position for long side trades remains our call.     

Stocks

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.  We remain bullish.

Yields

Not much to discuss here, 1.37% and at the top of the range.  No movement either with this mini stock correction.  Most of you have noticed I’ve reduced our position significantly here, whether this is the right move or not, a lot of money has been made in this call so I’ll make no apologies.  I do think we’ll have another opportunity to gross up this position in the spring.  Yields remain bullish trend, and will likely remain bullish trend through the first half of this year (and may hold bullish trend throughout the rest of the year despite a Scenario 4 outlook coming in 2H2021, we’ll see). 

Dollar

So stocks slide, and the Dollar catches a bid.  Makes perfect sense within our positioning model.  The fact was, the dollar tapped the low end of the range yesterday and was immediate OS.  We’ll see if our call of the USD making an intermediate-term “bottom” is correct or not.  For now, we’ll continue to look for OB rally’s to sell into.   

Commodiites

Corrections in commodities have been few and far between.  I shouldn’t have to call out market levels on a daily basis here, you know what’s going on.  You have to capitalize on the correction days when they come along.  Natural Gas prices look intriguing here….

*Jay Powell at 9am CST

*Consumer Confidence due at 9am CST

Don’t front run me, wait for the signal

Good luck

MarketTrendRange LowRange HighNotes
     
SP500Bullish38523938Going to open immediate OS off the open today with bullish momentum
Nasdaq 100Bullish13,24612,919Momentum is “neutralizing” – immediate OS
Russell 2000Bullish22062293Nearing immediate OS, bullish momentum remains intact
10yr YieldBullish1.20%1.37%up 10bps last week in the 10yr.  With more fiscal stim to be voted on next week, what’s going to stop this? D3
VIXBearish21.7625.48Still bearish trend/top of the range
OilBullish57.2762.64caught in the upper half of the range
GoldBearish17721824Bouncing within it’s bearish trend, will likely be a short trade from the top of its range
USD (Cash)Bearish89.9390.96Bounce off of the low end yesterday.  Stocks correct, Dollar corrects higher
EUR/USDBullish1.20041.2184Immediate OB yesterday, may have another leg lower coming.
Bitcoin FuturesBullish43,10857,322BTC getting some immediate-term negative press about price valuation has us correcting today

These are proprietary trading ranges from RJO Futures. They are calculated by a customized standard deviation tool.

Originally Posted on February 23, 2021 – Market Outlook: Feb. 23, 2021

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