Morning Note: Words Worth Heeding!

Pretty much the same junky look for equities this morning that characterized yesterday’ session: ~60% of the SP500’s members are in the red, Nasdaq comp’s losers are besting gainers 2 to 1, and so on. 

The dollar and interest rates are both up, which is playing havoc with everything from tech stocks to commodities… Remember, both rates and the dollar, on a sustainably rising basis, are anathema to what the Fed aims to accomplish as we meander through what is a most, well…. we’ll call it dynamic, macro/market setup.

Biden’s set to talk up infrastructure spending like we’ve never seen tomorrow afternoon. If he’s convincing, it could play nicely for our materials, metals, etc., exposures… 

But, thing is, if he’s convincing, we could see rates even higher in response. 

Man, this has to be playing on the nerves of all those folks who thought growth stocks would continue to rocket to the moon!

Well, they certainly might resume their march into the stratosphere (especially if/when the Fed steps onto the long end of the treasury yield curve), but this isn’t the best technical setup I’ve ever seen:

QQQ (Nasdaq 100 tracking ETF):

The shorts (green line) are certainly piling on to QQQ:

As are the futures speculators who trade the underlying index:

Of course this could backfire on the bears if some bullish news sends growth stocks higher — leaving them to cover those positions, and, once again, exacerbate the upside…

Asian equities traded mostly higher overnight, with 11 of the 16 markets we track finishing in the green.

Same for Europe so far this morning, with 16 of the 19 bourses we follow higher so far.

U.S. major averages (save for the tech-heavy Nasdaq 100) have come back a bunch since I began typing this note: Dow now down 68 points (0.21%), SP500 down 0.36%,  SP500 Equal Weight up 0.07%, Nasdaq 100 down 0.75%, Russell 2000 up 0.90%.

The VIX (SP500 implied volatility) is up 1.21%. VXN (Nasdaq 100 i.v.) is up 3.01%. 

Oil futures are down 1.45%, gold’s down 1.57%, silver’s down 2.36%, copper futures are down 0.97% and the ag complex is down 0.89%.

The 10-year treasury is down (yield up) and the dollar is up 0.36%.

Led by solar stocks, banks, financials, metals miners and Eurozone equities — but dragged notably by MP (rare earth minerals miner), silver, uranium miners and gold — our core mix is off 0.39% to start the day.

Here’s JK Galbraith’s close to his instructive must-read (for anyone who believes history often rhymes) A Short History of Financial Euphoria. Words worth heeding, I assure you!

“When will come the next great speculative episode, and in what venue will it recur—real estate, securities markets, art, antique automobiles?

To these there are no answers; no one knows, and anyone who presumes to answer does not know he doesn’t know.

But one thing is certain: there will be another of these episodes and yet more beyond.

Fools, as it has long been said, are indeed separated, soon or eventually, from their money.

So, alas, are those who, responding to a general mood of optimism, are captured by a sense of their own financial acumen. Thus it has been for centuries; thus in the long future it will also be.”

Have a great day!


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