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MARCH 5, 2021
STOCKS – n/a
MACRO – SPY, QQQ
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- The Fed Is Likely To Remain On Hold At Its March Meeting
- Live Stream Will Start At 1:10 PM ET
- MORNING NOTE: WATCH FOR THE GAP FILL
- MIDDAY VIDEO- BONDS MAY PUNISH POWELL
- MIDDAY NOTE: YIELDS CONTINUE TO RISE
- Morning Note: This Can Still Grow Much Worse
- Morning Notes: Yield Curve Suggest A Market Top Is Near
It was a pretty crazy day of trading, with the S&P 500 jumping by 2% after plunging more than 1% to start the day. Today was more about volatility levels imploding and short-covering than I think a real rally driven by true buying.
But the NASDAQ was where most of the action was, and we can see that Qs hit support at $297 and managed to bounce nicely off it, rising back to resistance around $310.
It seems entirely possible that the NASDAQ continues the strength seen today, rising back to the downtrend around $316, or perhaps even to $319.50. I’m not sure that changes much though over the next couple of weeks though. The November and March uptrends are broken on the Qs, and that is not ideally what one wants to see. It seems that any rallies are likely to be still sold, and the trend is still lower for now.
Additionally, despite the rough drawdown in technology, the sector made no headway against the 10-year. The S&P 500 IT sector’s earnings yield rose this week to 3.9%, but the premium over the 10-year remained around 2.40%.
Yields stalled out today around 1.6%, and they are really getting overbought here. Could they go higher, yes, much higher. A pullback to 1.5% or even 1.3% isn’t out of the realm of possibility. It could even help provide the equity market a boost as I mentioned above.
But there are still plenty of people looking to short the 10-year, with the overnight repo rate negative. It is telling us a lot of people are looking to borrow the 10-year to go short. So that means for now, the pain trade likely means yields move higher.
Anyway, more this weekend.
Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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