Market at a Glance

Market at a Glance - 2/25/2021

By: Christopher Mistal

February 25, 2021

Fundamental: Improving. Corporate earnings were largely a success (where success was expected). Vaccine production and distribution are on the rise while new cases and deaths have eased. Weekly initial jobless claims were better than expected. Q4 GDP was also revised higher to 4.1%.

Technical: Consolidating. DJIA, S&P 500, NASDAQ and Russell 2000 all broke out to new all-time closing in February. DJIA and S&P 500 are still above their respective 50-day moving averages, NASDAQ has fallen below its. Key support for DJIA and S&P 500 is around January’s lows. NASDAQ could slip lower towards the highs of early last September.

Monetary: 0 – 0.25%. The Fed still has the liquidity spigot wide-open. The new administration is pushing another $1.9 trillion in stimulus spending. Inflation and inflation expectations are creeping higher. All of which is causing Treasury yields to rise. Stocks seem to be overreacting to the recent rise in yields. Yields have historically risen during the “Best Months.”

Seasonal: Bullish. March is normally a decent performing market month however post-election year payments to the Piper can take a toll on March as average historical gains are trimmed noticeably. In post-election years March ranks: #8 DJIA, S&P 500, Russell 1000 and Russell 2000; NASDAQ is 4th worst with an average loss of 0.2%.

Psychological: Retreating. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors have slipped down to 56.3%. Correction advisors have increased to 25.2% while Bearish advisors are at 18.5%. Bullish advisors are at their lowest reading since last November. Bearish advisors are only slightly higher which suggests previous Bulls have joined the Correction camp. Historically, bullish sentiment is still rather elevated even after the recent declines in the percentage of Bullish advisors.