Last week all three major market indices closed at record levels. What could be of concern about that? Right now, there appears not much. To be sure, at some point the cure for high stock prices will be - high prices.
The market views the chance that Congress passes a huge relief bill as very, very high. Weaker economic data such as jobless claims is dismissed. The country's mood seems very optimistic that we will be able to vaccinate the population leading to ending the pandemic and reopening economy where we are going bars, restaurants, theater, churches, schools, and air travel. This means service jobs and GDP growth. The rise in the 10-year US Treasury Note and 30-year US Treasury Bond yields hints that maybe Congress and the Biden administration may be overdoing the stimulus when the economy seems to be on the verge of reopening. So far the rise in yields has been good for the equity markets and not seen as a threat to the growth in terms of higher taxes and inflation.
US, European and Emerging Markets remain in strategic Bullish trends. Many indices remain above overbought level 3.
Equity Styles: Large Cap Growth remains dominant over Large Cap Value. Small and Mid-cap stocks continue outperforming Large Caps. Small caps very hot.
Ranked Sectors: Leaders - Comm Services, Technology, Consumer Discretionary, Financials; Laggards - Real Estate, Health Care, Consumer Staples, Utilities.
Interest Rates: 30-year and 10-year US Treasury yields rose to 2.01% and 1.20% respectively and remain well above rising trend lines; the 10-year -2year Yield curve is strongly positive.
Currencies: The Australian Dollar, the Euro, and the British Pound, are all strategically Bullish, and strengthened last week; the Yen had a selloff and is on Bear alert. US Dollar in a Bearish downtrend, weakened after reversing up from oversold level. Gold turned Bearish from Bear Alert.
Market indicators remain strongly Bullish, for now.