Euclid Investment Advisory Blog

Review & Analysis at Close February 27, 2023


Stocks opened strong Monday, February 27, setting the stage for a rebound from last week's losses, and then faded as the day progressed while bond yields continued to rise. Yields have climbed as the market prices in a higher peak in the fed-funds rate in 2023 and lower odds of cuts in the second half of the year. The changing forecast is a reaction to recent strong data on the
consumer economy and higher-than-forecast inflation readings. Economists, the market, the Fed, consumers, and businesses are all struggling to figure out the outlook for the U.S. economy. This time last year, there were widespread calls for a recession to have happened by now. Instead, the economy appears to be re-accelerating, potentially making inflationary pressures worse. Weekly Market Breadth indicators: NASDAQ Composite market - Bear Alert; NYSE market- Bear Alert.




All market equity markets rose from a near-term excessive selling then gains weaken on the re-evaluation of rate hike concerns and the latest economic

Sector Trends
Bullish - Materials; Bear Alert - Energy Financials, Industrials, Technology, Communication Services, Staples, Real Estate, Consumer Discretionary; Bull alert: none

Bearish: Utilities, Health Care, Gold Miners.                                                         

Fixed Income
The 10 yr. US Treasury Yield closed Monday at 3.922%, down slightly from last week's 3.955%. The long-term trend is up; it overbought near term and may pull back. The 2-year US Treasury Yield closed today at 4.78% up from last week's 4.67%. The long-term uptrend resumed, exceeding its peak of 4.72% on November 7, 2022. The 10-2 year Yield Curve remains inverted, the closing spread widened to -0.86 from last week's -0.72.

The trends vs. US dollar of Australian Dollar, Euro, British Pound, and Yen remain on Bear Alert. The US Dollar Index is on Bull Alert, having bottomed on February 2 at 100.68, and closed up at 104.62 today. The US dollar is nearing a Bullish signal.

Gold is now Bear alert, as are Base Metals and Copper; West Texas Light
Crude forming a bottom.

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