Sponsored By:
Today’s Summary
Monday, February 1st, 2021
Indices: US Stocks kicked off the week/month on a positive note, with the Dow Jones Industrial Average advancing 229 points or 0.76%. The S&P 500 and Nasdaq rose 1.61% and 2.55%, respectively. The Russell 2000 closed higher by 2.53%.
Sectors: All 11 sectors closed higher. Consumer Discretionary led, gaining 2.60%. Consumer Staples lagged but still managed to close slightly positive by 0.09%.
Commodities: Crude Oil futures moved higher by 2.57% to $53.54 per barrel. Gold futures rose 0.73% to $1,864 per ounce.
Currencies: The US Dollar Index gained 0.48%.
Interest Rates: The 10-year US Treasury yield rose to 1.096%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
The active de-grossing (long selling + short covering) has been some of the most extreme (7 sigma event) on record and was in-line with mid-Mar ’20 (biggest since 2010). Such events typically mark the bottom in equities and have been followed by 20%+ rallies in coming months. pic.twitter.com/DY7sLZTRLB
— Moritz (@Moritz_of_Hesse) January 29, 2021
Today’s Chart of the Day was shared on Twitter by @Moritz_of_Hesse. The top chart comes from Morgan Stanley Prime Brokerage. It essentially shows the degree to which hedge funds reduced leverage/risk by covering their short positions and selling some of their longs. As you can see, hedge funds de-grossed in a big way last week. This sort of extreme de-grossing has often marked bottoms in the S&P 500. In a comment to The Chart Report, Moritz said, “Last week was a 7 sigma event, in terms of de-grossing. You typically see this during a liquidation event due to systemic risk. In this case, the S&P 500 did not significantly decline, but the end result of the deleveraging (more dry powder on the sidelines) was the same.”
Sponsored:
$GDXU and $GDXD, the 3x leverage & -3x inverse leverage Gold Miners ETNs were created to provide targeted access for sophisticated traders.
Quote of the Day
“In most bull markets, there comes a time when the public controls fluctuations and the efforts of the largest operators are insufficient to check the rising tide.”
– Charles Dow
Top Links
As Goes January, So Goes The Year – LPL Financial Research
The team at LPL Financial Research weighs-in on the January Barometer.
Squeeze ‘Em – The Weekly Trend
David Zarling and Ian McMillan discuss GameStop, the January Barometer, commodities, and more.
Monthly Candlesticks – January 2021 – Alf Charts
Alfonso Depablos breaks down several monthly candlestick charts.
The Short Squeeze That Broke The Market – Momentum Monday
In their weekly Momentum Monday video, Howard Lindzon and Ivanhoff highlight the strongest stocks, trends, and themes across the markets.
Short Interest & Short Squeezes Explained with CarParts Example – AlphaTrends.net
Brian Shannon gives a brief tutorial on how to identify potential short squeeze opportunities.
Top Tweets
The catch is the January Barometer has been broken lately.
In fact, a lower Jan for the S&P 500 has been bullish recently, with the final 11 mos higher 8 of past 9 times after a negative Jan.
Of course, the most recent 3 times ('15, '16, and '20) all had significant volatility. pic.twitter.com/lgccjyyzoe
— Ryan Detrick, CMT (@RyanDetrick) January 31, 2021
Speculative appetite is not just relegated to the headliners for the Reddit boards. The broader tech index $NDX has leapt to a fresh record high relative to the $SPX in its ratio today: pic.twitter.com/ZWEUU415fU
— John Kicklighter (@JohnKicklighter) February 1, 2021
Speaking of holding the line..if Large Caps are going to retain their leadership, it makes sense that it would happen here.. $VV $VO $VB pic.twitter.com/M7sJcIaM1F
— Drew Wells, CMT, CIMA® (@DrewTheCharts) February 1, 2021
Another record for the history books:
Last week was the highest $VIX *ever* for an $SPX decline of 0-5%.
It's off the chart & not even close – this is a nervous market with emotions running high.
Welcome to 2021. pic.twitter.com/G37fpcroVj
— Macro Charts (@MacroCharts) February 1, 2021
Today's most over Tweeted chart. #Silver . Stalling at long term resistance but pretty futile. Next stop $30 and above there it's off to the moon.
Reddit/RH made the Keynes beauty contest that much easier. The really hard part is managing greed & taking profit. #silversqueeze pic.twitter.com/fLGJMWzaDd— James Brodie CMT (@jamesrbrodie) February 1, 2021
Silver Futures, Daily. Beautiful base, but show me a breakout first. pic.twitter.com/CSRV2nOnFZ
— Brian G (@alphacharts) February 1, 2021
can someone who understands Commitment of Traders explain to me where this "big" short position is in silver?
Commercials are hedgers against physical silver they mine and aren't likely to be squeezed is how I understand it pic.twitter.com/KlQk9YClV4
— Brian Shannon, CMT (@alphatrends) February 1, 2021
For all the talk of a short squeeze — money managers have been net-long on silver since mid-2019, according to CFTC datahttps://t.co/8bUXOponWb via @markets pic.twitter.com/dfGKsFT9Gg
— Katie Greifeld (@kgreifeld) February 1, 2021
Hedge funds and other speculators are holding over $35 billion in net short positions, betting against further declines in the US Dollar.
Often, that has led to a short squeeze and a rise in the exchange rate; and often a $USD rally is negative for risk assets (stocks). pic.twitter.com/YY5cRgAJpk
— Tiho Brkan (@TihoBrkan) January 31, 2021
moves in commodities today are impressive given the broadly stronger U.S. dollar.. not just silver.. and this is pretty removed from the WSB phenomenon$NG_F +10%, $SI_F +8%, $PL_F +5%, $CL_F +2.7% pic.twitter.com/8uGcP5I1JS
— Jared Blikre (@SPYJared) February 1, 2021
My Global Commodity Index is in a bull market as both it and the KST are above their MAs. It faces a really big test at a 40yr resistance trendline marking the top of a potential giant consolidation pattern. Valid upside break would imply higher commodity prices for years to come pic.twitter.com/jCDc7vRZUx
— Martin Pring (@martin_pring) February 1, 2021
The Commodities Revolution Will Not Be Televised pic.twitter.com/Z6OAkeOLmx
— J.C. Parets (@allstarcharts) February 1, 2021