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Today’s Summary
Monday, December 14th, 2020
Indices: US Stocks were mixed in today’s session. The Dow Jones Industrial Average fell 185 points or 0.62%. The S&P 500 moved lower by 0.44%, while the Nasdaq rose 0.50%. The Russell 2000 closed slightly higher, inching up 0.11%.
Sectors: 2 of the 11 sectors closed higher. Tech led, gaining 0.36%. Energy lagged, dropping 3.50%.
Commodities: Crude Oil futures moved higher by 0.90% to $46.99 per barrel. Gold futures fell 0.62% $1,832 per ounce.
Currencies: The US Dollar Index inched lower by 0.06%.
Interest Rates: The 10-year US Treasury yield slipped to 0.896%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
$IWM is over 30% above its 200-day SMA and this is a record since trading began (2000). For reference, $SPY is 15.6% above and $QQQ is 19.7% above. IWM has been 25% or more above its 200-day three times (Sep-2003, Sep-2009, Dec-2020). Not much of a sample size. #FWIW pic.twitter.com/iO7LMMTBGM
— Arthur Hill, CMT (@ArthurHill) December 14, 2020
Today’s Chart of the Day was shared on Twitter by Arthur Hill (@ArthurHill). It’s a chart of the Russell 2000 ETF, $IWM, since its inception in 2000. Small-Caps have been sprinting full speed ahead in recent weeks. Arthur points out that $IWM is now more than 30% above its 200-day moving average, which the most extended it’s ever been. In fact, there have only been two prior instances where $IWM was more than 25% above its 200-day moving average (2003 & 2009). Interestingly, both of those instances occurred as the broader market was recovering from a major bear market…sound familiar? Like many of the developments we’ve seen recently, the interpretation of this depends on your time frame. In the long-term, Small-Caps strength is constructive to the broader market outlook. In the short-term, Small-Caps are getting extremely stretched and could be due for some mean reversion. If you’d like some more food for thought on this – check out what happened after the Nasdaq ($QQQ) got this stretched in early September.
Quote of the Day
“If you run a four-minute mile, you’re going to need a breather.”
– Todd Sohn
Top Links
Macro Monday – Jotting on Charts
Grant Hawkridge shares some noteworthy charts that shed some light on the macro environment.
Here Come Santa Claus – The Weekly Trend
In this podcast, David Zarling and Ian McMillan weigh-in on sentiment, breadth, volatility, and more.
Japan Breaks Out To 29-Year Highs. What Are We Buying? – All Star Charts
JC Parets takes a look at the breakout in Japanese equities.
U.S. Dollar About To Reach The Point Of No Return? – Kimble Charting Solutions
Chris Kimble points out that the US Dollar Index, $DXY, is approaching a key level around $88-89.
Bull Markets Rotate Through Sector Rotation – Momentum Monday
In their weekly Momentum Monday video, Howard Lindzon, and Ivanhoff highlight the strongest stocks, trends, and themes.
Top Tweets
Interesting stat in light of the S&P 500's fourth straight down day.
The S&P 500 has spent just 32 trading days this year in "losing streaks" (losses of 2 or more consecutive days).
That's the lowest amount since at least 1950. In one of the craziest market years in history.
— Callie Cox (@callieabost) December 14, 2020
1/ How strong is market breadth? Nasdaq & NYSE composites have both achieved extreme levels of participation. What happens next? Further strength, if history is any guide. pic.twitter.com/n7XqyahwKh
— Mark Ungewitter (@mark_ungewitter) December 14, 2020
We hear claims that the high percentage of issues above their 200-day moving average is bearish, but the data doesn't support that conclusion. Sure, in the near-term, there's often a pause, but it's a better intermediate momentum indicator than sell signal. pic.twitter.com/7nlvfdPPsT
— RenMac: Renaissance Macro Research (@RenMacLLC) December 14, 2020
AAII bull-bear spread still hovering near late-2019/early-2020 range but also below early-2018 levels (pre-short-vol implosion) @AAIISentiment pic.twitter.com/OGsnE0nIKN
— Liz Ann Sonders (@LizAnnSonders) December 14, 2020
Utilities had been a thorn in the side of the 'increasing risk-appetite' thesis for a few months recently… not anymore $XLU pic.twitter.com/vsQhJL2ldH
— Steven Strazza (@sstrazza) December 14, 2020
S&P Real Estate $XLRE vs $SPY ? pic.twitter.com/pmjOoEUYmR
— ATMcharts (@ATMcharts) December 14, 2020
$DXY #DOLLAR —- Cycles ………… pic.twitter.com/3wXG0gH0Rk
— Nautilus Research (@NautilusCap) December 14, 2020
Any overweight EM thesis can/should include a potential bear market in the US dollar as a tailwind. But I hope there's more to your thesis than a currency tailwind. I've never had much luck betting on the direction of the US Dollar.$EEM $SPY $BRLUSD $DXY pic.twitter.com/M6S2CRZk9x
— Shane C. Murphy (@murphycharts) December 14, 2020
Two big bases for 2021. pic.twitter.com/DN83AL5ZpF
— Strategas (@StrategasRP) December 14, 2020
Asset Class Returns over the Last 10 Years…
Data via @ycharts pic.twitter.com/njj8A19xiF
— Charlie Bilello (@charliebilello) December 14, 2020
One took place the same week the fastest 30% bear market ever ended for the S&P 500.
The other took place the same week the S&P 500 was up 65.5% from the other magazine cover.
Nothing like improving price action to change the views on sentiment. pic.twitter.com/l3bUJN1sKQ
— Ryan Detrick, CMT (@RyanDetrick) December 14, 2020