Despite Profit Taking, Sentiment Still Favors Value

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Commentary Analysis

  • Comments: The preference for value over growth or momentum as a dominant theme may be temporarily succumbing to profit taking. Volume was relatively high for the Dow 30 Industrials (DIA), Utilities (XLU), Financials (XLF) and Healthcare (XLV). Also worth mentioning is the 1-month new low on the SP-500 (SPY) where short-term support levels have deteriorated to less than 26% and 60% of its constituents respectively trading above 5-day and 20-day moving averages. This increases the probability for further declines until supply discovers equilibrium with buyer demand.
  • Equities:
    • US Markets: Today yielded opposite results with resilience in the Nasdaq-100 (QQQ) and Russell-2000 (IWM) while the SP-500 (SPY) and Dow 30 Industrials (DIA) lagged.
    • Leading Sectors: Materials (XLB); and Technology (XLK).
    • Lagging Sectors: Financials (XLF); Energy (XLE); and Industrials (XLI).
    • Int’l Markets: Strength in Latin America 40 (ILF) and Brazil (EWZ); and weakness in Japan (EWJ); Pacific Ex-Japan (EPP); and EAFE Index (EFA).
    • Volatility: VIX (VXX) initiated a bullish reversal and made a new 4-day high with volume surging @ 138%.
  • Large-Cap Volume Surgers:
    • Hanesbrands (HBI): -11.96% on 352% volume surge
    • Virgin Galactic (SPCE): +0.95% on 179% volume surge
    • Nortonlifelock Inc (NLOK): +10.77% on 145% volume surge
    • Unity Software (U) +3.63% on 122% volume surge
    • Roku Inc (ROKU) +4.22% on 71% volume surge
  • Small-Cap Volume Surgers:
    • 3D Systems Corp (DDD) +35.23% on 1074% volume surge
    • Plug Power(PLUG): +17.59% on 128% volume surge
    • Peabody Energy (BTU): +10.32% on 113% volume surge
    • Magnite Int’l (MGNI): -3.40% on 112% volume surge
    • Novavax (NVAX): -13.91% on 117% volume surge
  • Market Moving Events:
    • Economy/ US Labor: Mar-2021 JOLTS (Job Openings and Labor Turnover) @ 8.123mm vs estimates @ 7.5mm and previous @ 7.56mm. The +597k in new job openings points to an accelerated labor market recovery.
    • Central Banks / US: Fed Reserve double talk has not ceased. Fed Governor Brainard stating that “the economic outlook is bright, but uncertainty remains as jobs and inflation are far from the Fed’s goals.” Backing him up were Atlanta Fed President Bostic justifying current monetary policy by noting the 8 million jobs shortfall compared to pre-pandemic levels; and Philadelphia Fed President Harker views on an improving economic situation that is still under recovery.  Dissenting from this trio was Cleveland Fed President Mester’s who commented on rising stock market valuations and inflation risks.
    • Earnings / Positive Surprises: Simon Property Group (SPG); Occidental (OXY); NortonLifeLock Inc (NLOK); Ameren (AEE); International Flavors & Fragrance (IFF); Hanesbrands (HBI); and Transdigm (TDG) exceeded estimates.
    • Earnings / Negative Surprises: Wynn Resots (WYNN); Electronic Arts (EA); Macerich (MAC); and Perrigo (PRGO) failed to meet estimates.
  • Bond Rates: The 10-Year Treasury yield closed @ 1.62 (+0.02bps / +1.25%). The bearish reversal in the 20-Yr+ Treasury ETF (TLT) reconfirmed its direction with a new 1-month low.
  • Currencies: Trading in the major currencies (e.g. US Dollar (UUP); Euro (FXE) ; and Yen (FXY)) was neutral as they all continued to consolidate and await more data inputs (e.g. Wednesday’s CPI and Treasury Budget reports) to decisively influence investor/trader sentiment.
  • Cryptocurrencies: In general, major cryptocurrencies such as Grayscale Bitcoin (GBTC) and Ethereum (ETHE) are trending upward. Yet, the latter has clearly assumed market leadership in crypto-assets and its price-relationship with Bitcoin is showing no signs of changing anytime soon.
  • Commodities: The outlook for Gold (GLD) and US Oil (USO) is still bullish. However, the price-spread relationship between the two indicates that Gold has made a breakout and will probably outperform Oil over the near term.
  • Real Estate: Real Estate Index (IYR) is testing support near the previous week’s low. Residential (REZ) is beginning to consolidate and Homebuilders ETF (ITB) is initiating a bearish reversal and may be vulnerable to a correction.

ETF Daily Market Performance Summary: 11-May-2021

etf daily market summary for stocks, bonds, currencies, cryptocurrencies, commodities, real estate, and equity sectors
Click to enlarge

Market Diary: 11-May-2021

market diary summary for NYSE and Nasdaq exchanges: advancers, decliners, new highs and new lows, plus mega-cap market breadth
(Click table to enlarge)

Covid19 Global Status Update: Weekly % Change for Cases in 7-day period

The trend inIndia’s weekly % changes for total new cases within a 7-day time frame has not eased. Meanwhile, the US and Europe’s major economies demonstrate dramatic improvement due to accessible supplies of the Covid vaccine. However, somewhat disturbing is the trend for less ecomomially significant countries. The ones listed below have sizable populations and exhibit explosive growth in new infections. Granted, they have much lower total infections compared to other pandemically challenged countries, but the potential spread of variant and existing virus strains are an unmitigated global risk as long as vaccine distribution lag more developed regions.

CountryCases in last 7 daysWeekly % ChgPopulation
World5.416mm-5%
India2.716mm+3%1.392bn
USA282.7k-21%332.6mm
Turkey144.8k-38%85.1mm
France124.4k-18%45.5mm
Germany99.48k-22%84.01mm
Italy65.58k-18%60.38mm
Somalia500+385%16.3mm
Vietnam480+272%98.1mm
Dominican Rep4.42k+94%10.94mm
South Africa12.76k+48%59.95mm

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