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Today’s Summary
Thursday, February 3rd, 2022
Indices: Dow -1.45% | S&P 500 -2.44% | Nasdaq -3.74% | Russell 2000 -1.90%
Sectors: 10 of the 11 closed lower. Consumer Staples led, ticking higher by just 0.03%. Communications lagged by a wide margin, tumbling 6.69%.
Commodities: Crude Oil futures rose 2.28% to a seven-year high of $90.27 per barrel. Gold fell 0.34% to $1,804 per ounce.
Currencies: The US Dollar Index continued lower for the fourth consecutive day, dropping 0.67%.
Interest Rates: The US 10-year Treasury yield rose to 1.832%
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
One of these asset classes is not like the other two: it's making new highs and no one has exposure to it. pic.twitter.com/6LTiFVkAXm
— Willie Delwiche, CMT, CFA (@WillieDelwiche) February 3, 2022
Today’s Chart of the Day was shared by Willie Delwiche (@WillieDelwiche). The chart compares the six-month performance of Stocks ($VTI), Bonds ($AGG), and Commodities ($DBC). Willie points out that Commodities continue to outperform Stocks and Bonds. Generally speaking, investors lack exposure to Commodities as an asset class, and it’s easy to understand why. Prior to 2020, Commodities had been dead money for a decade. They don’t yield income like Stocks or Bonds, so they were relatively unattractive in the low-interest-rate environment that we had been in. Also, they require more tactical management than Stocks or Bonds, making them unpopular in this era of passive investing. We could easily see Commodities continue to shine, as money managers chase performance in this abandoned asset class.
Quote of the Day
“If you want to have a better performance than the crowd, you must do things differently from the crowd.”
– Sir John Templeton
Top Links
Midweek Update – The Chart Report
In this quick video, Steve Strazza and I discuss some of the biggest technical developments from this past week, including the breakout in Global yields and Energy stocks.
A Little Less Negative – Bespoke
Bespoke breaks down the results of the latest AAII Sentiment Survey.
Sector Rotation to Defense Continues – RRG Charts
Julius de Kempenaer takes a look at recent sector rotation within the S&P 500.
Gold and Euro Bulls Hope Trend Line Support Holds! – Kimble Charting Solutions
Chris Kimble examines the relationship between the Euro and Gold.
The Smaller and Broader the Index, the Worse the Breadth – Potomac Fund Management
Dan Russo shares his weekly breadth analysis.
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Top Tweets
Three facts from today’s craziness:
?Tech stocks were responsible for more than half of the S&P 500’s drop.
??$FB accounted for about 0.4 pp of that drop.
??The Nasdaq 100 fell 4.3% while the S&P fell 2.3%, tech’s 6th biggest underperformance in a day since 2009.
— Callie Cox (@callieabost) February 3, 2022
Daily performance of the major U.S. indexes:
Dow Jones $DJX: -1.46%
S&P 500 $SPX: -2.44%
Nasdaq-100 $NDX: -4.22%
Russell 2000 $RUT: -1.9%Every sector was pushed lower. pic.twitter.com/xSJNeDWjcu
— Caleb Franzen (@CalebFranzen) February 3, 2022
I think it's probably fair to say we're seeing lower-highs in the major indexes and lower-lows in two of them pic.twitter.com/KwcDcA1cWm
— Mike Singleton, CFA (@InvictusMacro) February 4, 2022
$XLK – Cannot seem to escape these levels…..yet. pic.twitter.com/hAmRlSTUsJ
— Larry Thompson (@HostileCharts) February 3, 2022
In the past 35 yrs, the only times AAII (retail) sentiment got more bearish and $SPX failed to rally was during the 1990 and 2008 recessions pic.twitter.com/GMriq6a3A6
— Urban Carmel (@ukarlewitz) February 3, 2022
Streaming vs. vacationing pic.twitter.com/iiWoASILTv
— Strategas (@StrategasRP) February 3, 2022
The high yield spread 4% level is something to watch as they begin to widen $SPY pic.twitter.com/p8iz4by11m
— Grant Hawkridge (@granthawkridge) February 4, 2022
Big moves across the pond. German and UK 10-Yr yields up over 10bps, near late '18/early '19 levels. Hawkish tone from ECB and back-to-back rate hikes from the Bank of England are why. We're in positive yield territory in Europe, folks. Thought we'd never see the day. pic.twitter.com/q21rJC7s37
— Liz Young (@LizYoungStrat) February 3, 2022
Rates are ripping across developed Europe following the ECB & BOE announcements pic.twitter.com/FnuZ25XPea
— Steven Strazza (@sstrazza) February 3, 2022
Massive base breakout followed by a flag pattern that resolved in the direction of the underlying trend.$LNG pic.twitter.com/9qCf1K5Nt0
— Alfonso Depablos (@AlfCharts) February 3, 2022
— Arun S. Chopra CFA CMT? (@FusionptCapital) February 3, 2022
The different levels of losses right now:
If you own an S&P 500 index fund (minor correction)
If you own the Nasdaq 100 (correction)
If you own small caps (bear market)
If you own Facebook (1987)
If you own crypto (crash)
If you own hyper-growth stocks (Great Depression)
— Ben Carlson (@awealthofcs) February 3, 2022
You’re all caught up now. Thanks for reading!