Post by Admin/YBB on Jan 30, 2021 7:54:28 GMT -6
[Italics within the brackets are my additions/elaborations]
Pg M1, Trader: Get ready for a bad February [2nd month of Presidential cycle can be quite bad]. A short-squeeze driven small-cap frenzy sucked the air out of the market to cause a down January finish. It appears that some big investors have quietly piggybacked on retail investors’ short-busting frenzy. The shorts on the other hand had to cover their huge losses by selling their other liquid holdings. The economic news was OK and single-dose vaccine from J&J/JNJ disappointed. But the economic news will only get better from here and the Fed may raise rates only in 2023 [2 years from now]. Any dip/correction may be painful but short [timewise].
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA -3.27%, SP500 -3.31%, Nasdaq Comp -3.49%, Russell 2000 -4.39%. DJ Transports -5.98%; DJ Utilities -0.65%. [Rotating spot retail XRT +17.55%] US$ index (spot) +0.32%, oil/WTI futures -0.14%, gold futures -0.45%.
52-weeks [index changes only], DJIA +6.11%, SP500 +15.15%, Nasdaq Comp +42.83%. [Rotating spot retail XRT +104.39%]
Cumulative A/D line decline after 12 weeks may have signaled a trend change [M15]
Pg M4, Europe: Swiss chemical giant Sika/SXYAY makes additives for concrete, construction and auto adhesives, waterproofing products, etc. Its sales declined in 2020 due to pandemic. But its stock did well and should continue to do well post-pandemic as general and infrastructure construction and manufacturing activity picks up. It is growing via acquisitions.
Pg M4, Emerging Markets: Biden has taken wait-and-see approach to China, so new US-China flareups seem off the table for now. But it may be conflicts delayed, not resolved. MCHI +10% YTD.
Pg M6, Commodities: Stimulus #3 and beyond should benefit gold [+24% in 2020]. Crosscurrents for gold will remain and gold will remain volatile. [There is also news that app-trading fever may hit gold/silver]
Pg M5, Options: Buy OTM SPY puts to protect from market weakness resulting from “Raddit Wolf Pack” activity and mixed news on pandemic.
[SP500 VIX 33.09, SKEW 134.30] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M26, M32: A bad week in Europe [Finland -1.57%, Denmark -4.53%] and a bad week in Asia [Malaysia -1.55%, Indonesia -7.71%]. The equity CEF index [data to Thursday] underperformed the DJIA and its discount was -6.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.06%, 2-yr 0.11%, 5-yr 0.45%, 10-yr 1.11%, 30-yr 1.87% [Treasury data*]. Dollar rose, DXY 90.54, +0.3% [M35]. Gold [Handy & Harman spot, Thursday] rose to $1,864 +0.6% [rumored footsteps of Reddit wolf-pack; M38]; the gold-miners rose. [^XAU was at 138.59, -1.11% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M32].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 11: Cover Story, “The GameStop Revolt Has Just Begun. Get Ready”. Several left-for-dead and heavily shorted small-caps suddenly perked up and rose to astonishing heights due to short-squeezes [crowd-squeeze may become a new term]. Robinhood app-traders with tips from WallStreetBets/Reddit were responsible for the phenomenon that forced exchanges, the SEC, the Federal Reserve and the While House to issue comments [even Jim Cramer!]. Stock and options trading volumes, especially by the retail traders, has surged as millions of new at-home app-traders entered the stock market with the stimulus money. Some hedge-funds were in trouble and others were spooked enough to raise cash by selling their most liquid stocks causing a general market selloff. Brokers imposed margin and trading restrictions on speculative small-caps. New web-crawlers will monitor specific social-media sites for stock chatter. Some of the affected small-caps may raise funds by issuing equity.
15 most shorted stocks: GME, FUBO, LGND, PUBM, BBBY, FIZZ, ALAC, AMCX, SPWR, MAC, SKT, TR, AXDX, ASO, BIGC.
Pg 20: Inside Cover Story “After 10 Years of Underperformance, Commodities Are Set to Boom. Here is how to Play the Rally”. There will be a commodity boom post-pandemic. There is lot of global monetary & fiscal stimulus and economies are gradually reopening. Investors may use funds that hold physical commodities [gold, silver, etc], are futures-based [oil, ags, etc], and/or invest in commodity-producers [of precious metals, industrial metals, oil, etc]. Commodity-producers are more disciplined now and are focusing on balance sheet and shareholder-returns instead of capex for speculative growth. Dr Copper may benefit from the ESG trend although most commodity investing isn’t ESG-friendly. Chinese economy will remain crucial as it is a huge commodity user. S&P GSCI index has 60% energy while Bloomberg commodity index has 25% each in energy and ags.
Broad Commodity ETFs: PDBC, DBC, COMB, GSG
Specialized Commodity ETFs: GLD, SLV, PPLT, USO, DBA
Commodity-Producers ETFs: GDX, GDXJ, SIL, XLE, XOP, GHAAX
Pg 4, Up and Down Wall Street: Is WallStreetBets a folly or bubble? Robinhood app-traders are using WallStreetBets at Reddit to pile into speculative small-caps [GME, KOSS, MAC, AMC, NAKD, etc]. Some of these companies may issue equity to exploit the unexpected runup. Some hedge funds were forced to cover their short positions. Elon Musk also got into the game by tweeting cryptically [his own Tesla/TSLA is at EV/EBITDA 127.8].
A bad week in which heavily shorted stocks rose sharply. Some of the stimulus money is finding its way into app-trading by the stuck-at-home crowd. But the number of large block trades of 50,000+ shares of GameStop/GME showed that it is not just the small retail traders. Fear gauge VIX closed at 33. Beware of high VIX, high volume market and don’t chase thinly-traded speculative small stocks with margin.
Pg 6, Streetwise: Reversion to meme? Forget cash flow, present value, growth, value, diversification, and only follow the crowd at WallStreetBets/Reddit for GME or another to become a meme-investor.
More later….
Pg M1, Trader: Get ready for a bad February [2nd month of Presidential cycle can be quite bad]. A short-squeeze driven small-cap frenzy sucked the air out of the market to cause a down January finish. It appears that some big investors have quietly piggybacked on retail investors’ short-busting frenzy. The shorts on the other hand had to cover their huge losses by selling their other liquid holdings. The economic news was OK and single-dose vaccine from J&J/JNJ disappointed. But the economic news will only get better from here and the Fed may raise rates only in 2023 [2 years from now]. Any dip/correction may be painful but short [timewise].
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA -3.27%, SP500 -3.31%, Nasdaq Comp -3.49%, Russell 2000 -4.39%. DJ Transports -5.98%; DJ Utilities -0.65%. [Rotating spot retail XRT +17.55%] US$ index (spot) +0.32%, oil/WTI futures -0.14%, gold futures -0.45%.
52-weeks [index changes only], DJIA +6.11%, SP500 +15.15%, Nasdaq Comp +42.83%. [Rotating spot retail XRT +104.39%]
Cumulative A/D line decline after 12 weeks may have signaled a trend change [M15]
Pg M4, Europe: Swiss chemical giant Sika/SXYAY makes additives for concrete, construction and auto adhesives, waterproofing products, etc. Its sales declined in 2020 due to pandemic. But its stock did well and should continue to do well post-pandemic as general and infrastructure construction and manufacturing activity picks up. It is growing via acquisitions.
Pg M4, Emerging Markets: Biden has taken wait-and-see approach to China, so new US-China flareups seem off the table for now. But it may be conflicts delayed, not resolved. MCHI +10% YTD.
Pg M6, Commodities: Stimulus #3 and beyond should benefit gold [+24% in 2020]. Crosscurrents for gold will remain and gold will remain volatile. [There is also news that app-trading fever may hit gold/silver]
Pg M5, Options: Buy OTM SPY puts to protect from market weakness resulting from “Raddit Wolf Pack” activity and mixed news on pandemic.
[SP500 VIX 33.09, SKEW 134.30] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M26, M32: A bad week in Europe [Finland -1.57%, Denmark -4.53%] and a bad week in Asia [Malaysia -1.55%, Indonesia -7.71%]. The equity CEF index [data to Thursday] underperformed the DJIA and its discount was -6.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.06%, 2-yr 0.11%, 5-yr 0.45%, 10-yr 1.11%, 30-yr 1.87% [Treasury data*]. Dollar rose, DXY 90.54, +0.3% [M35]. Gold [Handy & Harman spot, Thursday] rose to $1,864 +0.6% [rumored footsteps of Reddit wolf-pack; M38]; the gold-miners rose. [^XAU was at 138.59, -1.11% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M32].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 11: Cover Story, “The GameStop Revolt Has Just Begun. Get Ready”. Several left-for-dead and heavily shorted small-caps suddenly perked up and rose to astonishing heights due to short-squeezes [crowd-squeeze may become a new term]. Robinhood app-traders with tips from WallStreetBets/Reddit were responsible for the phenomenon that forced exchanges, the SEC, the Federal Reserve and the While House to issue comments [even Jim Cramer!]. Stock and options trading volumes, especially by the retail traders, has surged as millions of new at-home app-traders entered the stock market with the stimulus money. Some hedge-funds were in trouble and others were spooked enough to raise cash by selling their most liquid stocks causing a general market selloff. Brokers imposed margin and trading restrictions on speculative small-caps. New web-crawlers will monitor specific social-media sites for stock chatter. Some of the affected small-caps may raise funds by issuing equity.
15 most shorted stocks: GME, FUBO, LGND, PUBM, BBBY, FIZZ, ALAC, AMCX, SPWR, MAC, SKT, TR, AXDX, ASO, BIGC.
Pg 20: Inside Cover Story “After 10 Years of Underperformance, Commodities Are Set to Boom. Here is how to Play the Rally”. There will be a commodity boom post-pandemic. There is lot of global monetary & fiscal stimulus and economies are gradually reopening. Investors may use funds that hold physical commodities [gold, silver, etc], are futures-based [oil, ags, etc], and/or invest in commodity-producers [of precious metals, industrial metals, oil, etc]. Commodity-producers are more disciplined now and are focusing on balance sheet and shareholder-returns instead of capex for speculative growth. Dr Copper may benefit from the ESG trend although most commodity investing isn’t ESG-friendly. Chinese economy will remain crucial as it is a huge commodity user. S&P GSCI index has 60% energy while Bloomberg commodity index has 25% each in energy and ags.
Broad Commodity ETFs: PDBC, DBC, COMB, GSG
Specialized Commodity ETFs: GLD, SLV, PPLT, USO, DBA
Commodity-Producers ETFs: GDX, GDXJ, SIL, XLE, XOP, GHAAX
Pg 4, Up and Down Wall Street: Is WallStreetBets a folly or bubble? Robinhood app-traders are using WallStreetBets at Reddit to pile into speculative small-caps [GME, KOSS, MAC, AMC, NAKD, etc]. Some of these companies may issue equity to exploit the unexpected runup. Some hedge funds were forced to cover their short positions. Elon Musk also got into the game by tweeting cryptically [his own Tesla/TSLA is at EV/EBITDA 127.8].
A bad week in which heavily shorted stocks rose sharply. Some of the stimulus money is finding its way into app-trading by the stuck-at-home crowd. But the number of large block trades of 50,000+ shares of GameStop/GME showed that it is not just the small retail traders. Fear gauge VIX closed at 33. Beware of high VIX, high volume market and don’t chase thinly-traded speculative small stocks with margin.
Pg 6, Streetwise: Reversion to meme? Forget cash flow, present value, growth, value, diversification, and only follow the crowd at WallStreetBets/Reddit for GME or another to become a meme-investor.
More later….