Equities’ Wild Week, The Recovery and Inflation Tug of War, and February’s Surprise Payroll Gains
March 8, 2021 | FIRESIDE CHARTS
The pivot away from last year’s leaders continues as cyclicals like financials and industrials take over and tech remains a drag on the market. The major U.S. indices closed Friday just barely in the green YTD and the upheaval is visible from a technical standpoint as S&P 500® Index returns cross and re-cross support levels. The flood of retail investors has certainly been busy in the past few weeks, but do they have the know-how to successfully navigate (or even stay afloat in) these uncertain waters? Commodities meanwhile are near a 50-year low relative to the S&P 500, but how will they fare through the current tug of war between economic recovery and inflation risk as President Biden’s $1.9 stimulus inches closer to becoming law? Treasury yields are certainly still feeling the effects of the clash this week as February’s surprise payroll gains enter the equation. As always, perspective is key, but as we approach the one-year anniversary of Covid lockdowns, it’s good to finally see material gains in the hardest hit industries.
1. As the markets figure out the new leadership, only the financials and industrials sectors hit new highs last week.
Source: The Chart Store, from 3/8/21
Source: The Chart Store, from 3/8/21
2. The market chop is visible from a technical standpoint, first a break-out above and now below the ascending wedge.
Source: The Chart Store, from 3/8/21
3. Just like real bubbles, when they pop, they can so quickly:
Source: The Daily Shot, from 3/8/21
4. An ominous sign? …the lemming crowd is now “all-in”…
Source: The Daily Shot, from 3/8/21
5. A long-term trend ready to reverse? Relative to the S&P 500, commodity prices are at a 50-year low:
Source: The Daily Shot, from 3/8/21
6. The yield rally continues but looks extended short term…
Source: The Chart Store, from 3/8/21
7. While Friday’s job report was a welcome positive surprise, perspective is still in order:
Source: The Daily Shot, from 3/8/21
8. The better news was the majority of the new jobs were in the sectors that were the hardest hit by Covid:
Source: The Daily Shot, from 3/8/21
9. The earlier Covid stimulus and funding via QE is clearly visible. What will it take for this round?
Source: The Daily Shot, from 3/8/21
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