Euclid Investment Advisory Blog

Review & Analysis at Close September 20, 2021

Comments

Stocks fell sharply at the open today and recovered some losses in the final hour. Catalyst cited for the drop is the Evergrande Property likely default on its extended indebtedness. This could create a possible "Lehman moment” for China. Stocks have not been making headway for the last two weeks.

An additional uncertainty is the Federal Reserve meeting this week and possible announcement on Wednesday of a coming reduction of bond buying.

Equities

The NASDAQ, the S&P 500 indices remain strategically Bullish; Europe, Mid, Small caps now Bear alert; Emerging Markets, China remain strongly bearish.

Equity Styles: Large Cap Growth lead Value, Small Cap, Mid Cap and equal weight indices. All pulled back last week.

Ranked Sectors: 

  • Leaders- Real Estate, Technology, Health Care, Consumer Discretionary
  • Laggards - Consumer Staples, Utilities, Industrials, Materials

Interest Rates

The downtrends of the Yields of 30-year US Treasury Bond and 10-year Note are slowing, forming bottoms; can resume decline or reverse up (likely).

The flattening trend of the Yield Curve continues slowing, forming drawn out base; can resume decline of reverse up (likely).

Currencies

The Australian Dollar, the Euro, and the British Pound all weakened significantly and remain in long term downtrends.

The US Dollar resumed strengthening while in a long term uptrend.

Gold rose slightly while in a slight long term downtrend.

Chinese index fell sharply on possible Evergrande Property default. The index remains in a long term downtrend.

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