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Today’s Summary
Tuesday, February 23rd, 2021
Indices: US Stocks closed mixed after clawing back losses from earlier in the day. The Dow closed flat (16 points or 0.05%). The S&P 500 managed to close positive by 0.13% after being down as much as 1.83% intraday. The Nasdaq slipped 0.50%. The Russell 2000 underperformed, falling 0.88%.
Sectors: 8 of the 11 sectors closed higher. Energy led, gaining 1.65%. Consumer Discretionary lagged, falling 0.66%.
Commodities: Crude Oil futures moved lower by 0.81% to $61.20 per barrel. Gold inched lower by 0.16% to $1,806 per ounce.
Currencies: The US Dollar Index inched higher by 0.12%.
Interest Rates: The 10-year US Treasury yield moved slightly lower to 1.343%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
this is not fear… pic.twitter.com/zpg7OoUQId
— ? I. Vodenitcharov CFA CMT (@iv_technicals) February 23, 2021
Today’s Chart of the Day was shared on Twitter by @iv_technicals. It’s a heat map of the S&P 500 showing today’s % change for each component (as of 1pm EST today). The flavor of the week is Rotation. Over the past two days, we’ve seen a sharp rotation out of high-flying Growth stocks and into Value stocks. This week’s price action might feel like panic, but we tend to think of rotation as a healthy part of bull markets. The reason these rotation days tend to feel so brutal is because Growth areas of the S&P 500 are much larger than Value areas of the market. Yesterday, Christian Fromhertz pointed out that Growth sectors, like Tech, represent 27% of the S&P 500 while Value sectors, like the Energy sector, represent just 3%. If you take a second to inspect this heat map, you’ll clearly see the rotation. Most of the bright red names are large Growth/Tech names while most of the bright green names are smaller Value/Energy names. So far, this pullback might feel like a full-blown risk-off environment, but we’re not exactly seeing a sea of red. At this point, it’s really just rotation doing its thing.
Quote of the Day
“Today’s headlines and history’s judgment are rarely the same.”
– Condoleezza Rice
Top Links
Credit Is Fine. Buy Stocks. – All Star Charts
JC Parets explains that the credit markets are giving stocks the green light.
The Soft Commodities Make a Big Move – StockCharts
Mish Schnieder weighs-in on the breakout in soft commodities.
Are Large-Cap Tech Stocks In Big Trouble? – Kimble Charting Solutions
Chris Kimble examines the outlook for Large-Cap Tech stocks.
Post-Election Year March: Performance Slips to Bottom Half – Almanac Trader
Seasonality expert, Jeff Hirsch takes a look at how stocks have historically performed in March.
Bitcoin’s Largest Drawdown Since Last Month – Bespoke
Bespoke takes a look at Bitcoin’s recent sell-off.
Top Tweets
Frat party market: boot and rally. pic.twitter.com/wNRiv6yqzz
— Michael Santoli (@michaelsantoli) February 23, 2021
The S&P 500 has been within 5% of its all-time high for 4 straight months.
To say that this pullback is normal and needed is an understatement. pic.twitter.com/FQmVvxSHD8
— Michael Batnick (@michaelbatnick) February 23, 2021
$QQQ $NDX obvious rotation now – #growth stocks being sold hard past two days (middle panel) – #value (lower panel) started outperforming a couple weeks ago $XLI $XLE $XLF $IYR $IYT $XLB pic.twitter.com/ewdyxjZL1P
— Cousin_Vinny (@Couzin_Vinny) February 23, 2021
for those that don't think Value can outperform Growth…
these relationships can revert back to the mean… look at the $IWM vs $QQQ over 5yr, look similar? https://t.co/ZjTevp0jtR pic.twitter.com/852dXY0dCp
— Christian Fromhertz (@cfromhertz) February 22, 2021
Red Flag: Margin Debt >34% last 12-mos. Yet it rose >50% YOY before many key market tops & >60% before major bears of ‘73-74, ‘00-02, ‘07-09. Bulls awaiting a wilder speculative top ought watch this gauge—BUT some big bears surfaced w/ little/no warning: ‘69-70, ‘87, ‘90, ‘20 pic.twitter.com/OuKar7VwiY
— The Leuthold Group (@LeutholdGroup) February 23, 2021
For a dose of good news, the S&P 500 Energy Index is on track for its best month ever relative to $SPX. pic.twitter.com/biFTELwM4A
— Elena Popina (@lena_popina) February 23, 2021
The U.S. 10-year Yield is finding resistance today right where it should. $TNX pic.twitter.com/XXJiKQziqW
— Matthew Timpane, CMT (@mtimpane) February 23, 2021
#Commodities are moving! pic.twitter.com/t64Gsofp4C
— Grant Hawkridge (@granthawkridge) February 23, 2021
$SLV line chart to get rid of that wild silver squeeze day. Still another day tomorrow so not sure if it gets it or needs some rest first but very bullish if this breaks out. pic.twitter.com/v98tGINQOm
— Gregory Krupinski (@G_krupins) February 22, 2021
$ZS_F Soybeans with a perfect set up. Band squeeze. Relative strength against $SPY is already breaking out. Still holding trend. The ags could all get very interesting in the next couple weeks. Again. LOL pic.twitter.com/YyCVTEVZMV
— Jason Perz (@JasonPerz138) February 23, 2021
Copperonks!! pic.twitter.com/jELVhQD1km
— Eddy Elfenbein (@EddyElfenbein) February 23, 2021
Dont u dare pic.twitter.com/SbONjnwFt9
— Arun S. Chopra CFA CMT? (@FusionptCapital) February 22, 2021
Google Trends: 'stock market #bubble' pic.twitter.com/khy50f2DmQ
— jeroen blokland (@jsblokland) February 23, 2021