Lower Interest Rates and Dovish Fed Boost Tech and Growth

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  • Summary Analysis:
    • In my opinion, which is what this blog is at the end of the day, the month has been mainly one continuous period of churning. Traders are flipping and flopping back and forth between value and growth. Today the market sided with growth, which is mostly represented by technology stocks.
    • Lower interest rates played a supporting role in the above as the 10-year treasury ceded 3 bps and closed @ 1.60%. To be fair, a hat tip should be given to the Fed which sees inflation falling as “base effects” subside and issued dovish comments (see below in Market Moving Events).
    • Of course, lower rates are never supportive of a stronger US Dollar (UUP) which has been underperforming the Euro (FXE) lately.
    • Finally, the morale in Cryptocurrencies improved as prices have fallen to levels which are attractive to buyers. Grayscale’s Bitcoin Trust (GBTC) is finding support at double bottom levels while its Ethereum Trust (ETHE) is being bidded up to test resistance near its 34-day exponential moving average.
    • In commodities, Gold (GLD) continued its definitive breakout above the previous resistance of its cup-with-handle pattern and Oil (USO) gapped up in preparation for a new upleg after successully testing support at the lower range of its bullish channel last week.
    • The correction in Real Estate (IYR) and Residential Real Estate (REZ) appears to be over, with both preparing for a new upleg.
  • Equities:
    • US Markets: Although equity markets advanced with the Nasdaq-100 (QQQ) reasserting leadership, volume was well below average. The Nasdaq-100 (QQQ) and SP-500 (SPY) acheived 2-week new highs and the Dow 30 Industrials (DIA) made a new 1-week high. Smaller-cap stocks, which are represented by the Russell-2000 (IWM) continue to consolidate.
    • International: Leaders in Brazil (EWZ); and Emerging Markets (EEM). Laggards in China (FXI); and Pacific Ex-Japan (EPP).
    • ETF Sector Strength: Technology (XLK); and Communications (XLC).
    • ETF Sector Weakness: Utilities (XLP); Consumer Staples (XLP).
  • Large-Cap Volume Surgers:
    • n/a.
  • Small-Cap Volume Surgers:
    • n/a
  • Market Moving Events:
    • Economy: n/a
    • Central Banks / US: In a nutshell, St. Louis Fed President Brainard provided a clearer picture on where the Fed currently stands on tapering its asset purchases: “we are not quite there yet”. However, my interpretation is this “yet” implies the existence of an inevitable future target date when actual tapering begins and an accomodative QE policy ends.
    • Earnings / Positive Surprises: n/a.
    • Earnings / Negative Surprises: n/a.

ETF Daily Market Performance Summary: 22-May-2021

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

Market Diary: 22-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)

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