While the Ides of March is behind us (March 15 - the day Roman statesman Julius Caesar was assassinated) nevertheless the markets continue lopping off profits of selected former high-ranking investments among other changes. Small caps in particular not only fell in our ranking system but also are no longer dominant over the large cap S&P 500. This dominance started October 6, 2020 and ended March 29, 2021. The NASDAQ Composite Index is not doing well.
The issuance of SPACs (special purpose acquisition company) has gotten frothy with 21 launched in the week of March 15 and 9 issued last week. In addition, the US Dollar is now in a firmly established strategic Bullish trend while the Euro is in a Bearish trend. This reversal will upset trade flows and is already affecting Emerging Markets.
The market seems to be a bit muddled, as it tries to sort out the recent pause in rising US Treasury Bond Yields, Europe's new lock-downs and efforts to vaccinate its populace, a rise in US Covid-19 cases, and the likelihood of tax increases, etc., etc.
In a pricey market it doesn't take much to take money off the table.
On the other hand now that spring is here we see better days ahead with the increasing pace of re-opening the US economy, an expected positive Jobs number on Friday and spending of our stimulus checks. We are focusing on holdings that have value and quality holdings in the industrial, financial, energy, basic materials, and consumer discretionary sectors.
The S&P 500 fell 0.05% yesterday, Monday. However, declines of S&P Small and Mid-cap indices, while remaining in strategic Bullish trends, are flashing caution.
Equity Styles: While underlying trend favors Large Cap Value, its strength vs. Large Cap Growth has moved sideways since May 9th. We are monitoring for an inflection point.
Ranked Sectors: Trend leaders despite today's losses: Energy, Financials, Industrials, Materials; Laggards - Staples, Health Care, Utilities, Tech, Consumer Discretionary.
After dipping, 30-year US Treasury Bond Yield rose to 2.424% and 10-year Note Yield rose to 1.721%. Both trend lines are up. The Yield curve widened to 1.59.
The Australian Dollar on Bear Alert, the Euro and Yen are now in Bearish trends, British Pound in weakening Bullish trend. US $ now strategically Bullish.
The US Dollar rose to 92.96 from 91.74 after breaking to upside from a base-building (since December) pattern. Gold is Bearish, moving sideways since March 8.
Style Box Change
Russell 2000 (small cap index) is now under performing the S&P 500. S&P Small caps fell 2.47% today while S&P Large Cap Growth rose 0.11%.
Short term Market indicators for NASDAQ show increasing risk of pullback, investments with large gains see profit-taking. Systemic risk is not indicated.