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Today’s Summary
Friday, February 26th, 2021
Indices: US Stocks were mixed in today’s session. The Dow Jones Industrial Average dropped 470 points or 1.50%. The S&P 500 fell 0.47%, while the Nasdaq rose 0.56%. The Russell 2000 closed flat (0.04%).
Sectors: 3 of the 11 sectors closed higher. Technology led, rising 0.53%. Energy lagged, dropping 2.37%.
Commodities: Crude Oil futures moved lower by 2.94% to $61.66 per barrel. Gold tumbled 2.39% to $1,733 per ounce.
Currencies: The US Dollar Index gained 0.88%.
Interest Rates: The 10-year US Treasury yield fell to 1.419%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
To me, rates are big part of the story in regards to which sectors/industries we want to be overweight and underweight in the market… pic.twitter.com/8LujyDVuyG
— Ian McMillan, CMT (@the_chart_life) February 26, 2021
Today’s Chart of the Day was shared on Twitter by Ian McMillan (@the_chart_life). The major development this week was the breakout in interest rates. This jump in rates has been a key driver of the rotation we’re seeing in the stock market. In a comment to The Chart Report, Ian said, “There’s been a lot of discussion over whether or not higher yields are ‘good’ or ‘bad’ for the stock market. To me, it’s not so black & white. I think the better question is – which areas of the stock market are higher rates good/bad for? Higher rates are a tailwind for Value-oriented sectors, like Financials and Energy. On the other hand, higher rates can be a headwind for Growth-ier areas that have relied on cheap(er) debt to fund said growth over the last few years. We’re already seeing the impact of this sector rotation at the index level, with the Russell 2000 breaking out relative to the more Growth-heavy Nasdaq.”
Quote of the Day
“Keep in mind that neither success nor failure is ever final.”
– Roger Babson
Top Links
Three Charts You Need to See – LPL Financial Research
The team at LPL Financial Research shares three noteworthy charts.
The Most Defensive Assets On Earth Get Hit – All Star Charts
JC Parets points out that safe-haven assets like the Japanese Yen, Gold, and the 10-year Treasury Note are all hitting new lows.
What Happened to Gold? – The Irrelevant Investor
Michael Batnick weighs-in on Gold’s lackluster performance.
RIP COVID-19 Portfolio – The Bear Traps Report
Larry McDonald shares his thoughts on the current market environment.
Rates Head Higher – CNBC
In this interview, Chris Verrone of Strategas Research offers his thoughts on the jump in Bond yields and what it means for the equity market.
Top Tweets
again, here's some PERSPECTIVE$QQQ is still waaaaay above it's rising trend from the last decade. do we revert back? who knows. all I know is that we're still flying high in the sky even with the recent weakness pic.twitter.com/BHp7KPPzot
— BostonCharts (@bostonchaahhts) February 26, 2021
$NQ, 1h
Dancing on thin ice… pic.twitter.com/ylQKIQyuz6
— Yuriy Matso (@yuriymatso) February 26, 2021
6 straight months now of big tech underperformance relative to small caps. Is the Apple, Amazon, Mircosoft heyday finally over? pic.twitter.com/BZ0ZxeQW8F
— Stephen Eckhardt? (@seckhardt) February 26, 2021
a look at the U.S. energy sector vs $SPX in four time frames:
8/20EMA (top-right): bullish
20EMA/50SMA (top-left): bullish
50/200SMA (bottom-left): bullish
13/34W EMA (bottom-right): bullish pic.twitter.com/uuKpg3HJSL— David Cox, CMT, CFA (@DavidCoxWG) February 26, 2021
$MGK $MGV Pretty important ratio to keep an eye on.
RSI > 70 as well. pic.twitter.com/iNsHWf8zrZ— Pratyush Tulsian (@PrattyCharts) February 26, 2021
Here's the playbook when it comes to rising yields.
Yield pops tend to freak out stocks.
BUT.
1) this tends to happen early on in economic recoveries.
2) stocks tend to rally long-term.
Here's a table of months since 1990 when the 10-year yield has risen the most. pic.twitter.com/ZIArNZRKlR
— Callie Cox (@callieabost) February 26, 2021
Bonds – time to watch closely:
*TLT 2nd largest Volume spike of all time
*Record Volume for a DOWN day – prior was 3/18/20 (bottom)
*Drawdown near the worst in history, worse than 2013 Tantrum
*Price at key support
*ANY stabilization could trigger a sharp rally in growth Stocks pic.twitter.com/SAoXxKoCVv— Macro Charts (@MacroCharts) February 26, 2021
$DXY – Monthly pic.twitter.com/qQHdgAZ7TU
— Bhagyashree Urdhwareshe, CMT (@sunsofttech) February 26, 2021
$DBC had an RSI over 80 and 200-day z-score near 3 as it traded into a cluster of resistance. pic.twitter.com/bzb0YRYZKN
— Dan Russo, CMT (@DanRusso_CMT) February 26, 2021
Uh oh #gold pic.twitter.com/XKKaKnh9Re
— David Rath (@DJwrath) February 26, 2021
Ran-dumb:
All months where $SPX traded up 5% or more at some point during the month yet only finished the month up between 2-3%.
Hasn't happened often – but also hasn't meant anything "bearish" forward looking.
Feb-21
Sep-13
May-13
Mar-87
Sep-80(all up 8%+ 6 months out)
— Steve Deppe, CMT (@SJD10304) February 26, 2021