Euclid Investment Advisory Blog

Review & Analysis at Close November 22, 2021

Comments

Stocks ended last week in a mixed fashion. The Dow Jones Industrials are weakening, while the NASDAQ 100 is hitting a new record. The S&P 500 is in the process of testing a triple top and its early November high. These may be hinting that the S&P 500 is due for short-term pullback.

Concerns

Market breadth measures recently (since Nov 8) have weakened, and Sector leadership has narrowed considerably.

While the NASDAQ Composite has hit new highs, the % of its stocks hitting new highs has fallen to 30%, the % of stocks above its intermediate term moving average has fallen to 42% and its cumulative advance-decline line has turned down.

For the NYSE, the % of stocks hitting new highs has fallen to 49%, the % of stocks above its intermediate trend line has fallen to 45%, and its cumulative advance-decline line has turned down.
For the S&P 500, the % of stocks hitting new highs has fallen to 45%, the % of stocks above its intermediate term average fell 58%, and its cumulative advance-decline line has started to fall.

On Friday November 19 the 10- and 30-year Treasury yields gapped down, the yield curve flattened further, and the US Dollar strengthened, particularly against the Euro.

The only sectors showing relative strength greater than the S&P 500 are Tech and Consumer Discretionary; all other are under performing.

Monday, and before the market’s open, Pres. Biden, as widely expected, announced the re-nomination of J. Powell as Fed Chair. After the open the S&P 500 and NASDAQ Composite Indices rose sharply and continued into the second hour when they completely reversed course and fell sharply. They struggled to rise at bit in the afternoon before falling to their lows in the last hour. The NASDAQ Composite, a highflyer of late, lost the most of the two. Treasury Yields rose sharply.

We could not find any economic news or geopolitical developments to trigger the reversals other than the re-nomination of J. Powell.


Equities

The S&P 500, and the NASDAQ Composite continue strategic their Bullish advance; Europe uptrend weakened; Emerging Markets on Bull alert; China remains Bearish.

  • Equity Styles:  Despite the sell off today, Large Cap Growth continues leading Large Cap Value and Mid and Small caps.

  • Ranked Sectors:  Leaders - Consumer Discretionary, Technology, Real Estate, Materials
    Laggards - Utilities, Industrials, Consumer Staples, Communication Services

Fixed Income

The 30-year US Treasury yield rose to its slightly negative Long-Term trend; the 10-year US Treasury yield increased and is above its rising Long-Term trend; the 2-year. US Treasury yield gapped up today; trend is up.

The Yield Curve flattened further this past week. The spread nearing smallest set July 19, '21.

 

Currencies

The Australian Dollar, Euro, British Pound and Yen all continued weakening.

The US Dollar vs. basket of major currencies: US Dollar surged upward to resistance zone: 96.34 - 97.64 and is at overbought level 3.

Gold fell sharply today and remains in long-term bottoming pattern.

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