Euclid Investment Advisory Blog

Review & Analysis at Close May 23, 2022

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We have often said that no storm lasts forever and that when you see and hear market doom and gloom everywhere, e.g., evening news, market pundits, even this week's Barron's front cover headline: "Don't get Mauled" and showing a bear claw, that maybe, just maybe, we are near a market bottom. Last week saw a wholesale sell-off: even our high-quality dividend stocks, which had YTD gains, got hit, suggesting many had thrown in the towel.

Today we had a nice broad-based reversal and hope that it sticks. Indeed, our market indicators have stopped going down and have, in fact, ticked up. Bank stocks did very well today.

Our slower-moving strategic market trends are still pointing down. Nevertheless, there is a slight but measurable change in the wind - perhaps the green shoots of a very late spring.

Market bottoms take time to form before buyers decide risk has declined and buy stocks now on sale.

 

Equities

US Equities, one-week changes: S&P 500 -0.79%, NASDAQ 100 -1.66%, Russell 2000 +0.56%, NASDAQ Composite -0.99%.

Foreign equity markets:  China +3.17%, Emerging Markets +2.63% and Europe +2.99%. VIX closed at 28.28, upward momentum decreasing.

  • Equity Style: One week change: Small, Mid cap Growth and Value indices had positive gains. Large cap growth and value stocks had modest losses.

  • Sectors: One week change: Gold Miners +3.34%, Financial +2.23%, Materials +1.93%, Utilities +1.33%, Energy +1.23%, Health Care +1.06%, Comm. Services +0.44%, Real Estate +0.37, Tech -0.44%, Industrial -5.08%, Consumer Staples -6.65%.

US Treasury Yields

US Treasury Yields: 2-year has signs of fatigue, fell to 2.58% from recent high of 2.78%; the 30-year closed at 3.065%, down from recent high 3.277%, target high3.30%.The 10-year yield closed at 2.859, down from recent high of 3.167. Our target was 3.0 to 3.1%. Yield rise show backing off after too-far, too-fast up moves. After turning positive April 5th, the 2-10 yr. Yield Curve flattened a bit, spread fell to 0.21 from 0.30.

 

Fixed Income
One week price change: The 7-10 yr. US Treasury Note ETF rose 0.16%, High Yield Corp Bond ETF rose 0.08%, Investment Grade Bond ETF rose 0.20%.

Bond prices fall when Yields rise. YTD price declines: 7-10yr Treasury ETF -9.87%, High Yield Corp Bond ETF -10.42%, Investment Grade Bond ETF -14.76%.

Currencies
Currencies vs. US Dollar: The Australian Dollar, British Pound, Yen and Euro all rallied, but still in downtrends. The Euro touched a low of 1.034 and bounced up.

US Dollar vs. basket of currencies: The US$, in parabolic uptrend, closed at 102.10, down from recent high 105.06. Upward momentum appears to have peaked.

With the US Dollar weakening, Gold rose 1.43% for the week, closing at $1,7283. The Dollar May strengthen in near term.

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