Euclid Investment Advisory Blog

Review & Analysis at Close June 28, 2021


Since the June meeting of the Federal Reserve, the markets have been whipsawed with diverse Fed-speak. One camp has indicated a possible tapering in September, while the other says they see no need to tighten monetary policy in the near term. So, who is right? The best guide is to examine the 10-2 yield curve which has flattened even as its long-term trend is up.

In spite of Fed ambiguity both cyclical and tech stocks continue to do well. Large cap growth has overtaken large cap value with small and mid-cap stocks lagging. While much political fanfare is being made over Biden's infrastructure plan, its benefits won't be felt until 2023-2024. Infrastructure spending happens slowly due to the planning, permitting and execution these projects require.

As we approach the end of Q2, the market should shift its attention to reported earnings and guidance. Indeed, comparative earnings per share estimates look very good.


S&P large, mid, small cap and Europe indices remain strategically Bullish; Mid and small cap indices weakening vs. the S&P 500; China trying to make a bottom.

  • Equity Styles: Value further weakened vs. Growth, Large Cap Growth is now leading Large Cap Value.  Small, mid cap and equal weight indices weakened.

  • Ranked Sectors:  Leaders - Technology, Communication Services, Real Estate, Financials;
    Laggards - Industrials, Materials, Staples, Utilities.

Interest Rates

The 30-year US Treasury Bond, 10-year Note Yield trend weakened further, watch for reversal; 2-year note yield fell from 0.270% to 0.250%.  Yield curve long term trend is positive but flattening, spread increased slightly to 1.24.


The Australian Dollar, the British Pound, and Euro weakening, rolling over.  Gold, after falling dramatically, is trying to make a bottom.

The US Dollar, while strategically Bearish, made a triple bottom (!), strengthened dramatically and advanced after pullback from short term overbought. A stronger US dollar is negative for Emerging Markets, commodities; US interest rates may also rise.

Analysis of the market's internals suggest a short term down cycle, with a low to moderate risk of a pullback within a bullish trend.

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