Monday Morning Market Brief
Global futures traded mixed on Monday morning to kick-off a busy earnings week, with over 100 companies in the S&P, and 13 in the DOW releasing earnings. We'll see the latest figures from Tesla, Apple, Microsoft, Caterpillar, and 3M to name a few. According to John Butters at FactSet, "In aggregate, companies are reporting earnings that are 22.4% above estimates, which is also above the 5-year average of 6.3%." Goldman's chief equity strategist, David Kostin, said, "On an absolute basis there is no doubt that valuations are extremely elevated. The index trades at the upper end of the historical range when measured using a variety of metrics, including P/E, P/B, EV/sales, EV/EBITDA, and market cap/GDP. These measures point to equity valuation ranking in the 96th historical percentile." He also mentioned that with low yields present, and the base case being no change in yields for at least a couple years, we may see continued support for higher equity valuations this year.
The positive sentiment that we're seeing in the Nasdaq, which is currently trading up around 1% pre-market, hasn't yet spilled over into the S&P, Dow, or Russell, as they continue to trade flat. Asian markets were mixed, and European markets traded notably in the red, with the DAX, CAC40, and FTSE 100, trading down around 1.5%. Many european nations remain under strict lockdown, which is putting continued pressure on sentiment, and of course equity valuations.
Vix caught a notable bid overnight, and is up around 7% to start the week. We're sitting at a 23 handle, and the ascending support trendline we've observed since December is maintaining it's integrity, for now. The dollar is trading off it's recent high's but is still showing strength just below the longterm descending resistance trendline - the DXY is sitting at 90.30 to start the week. The 10Y yield is breking out of it's flag formation, and to the downside. After hitting it's highest level since March 2020 a couple weeks ago, we're slowly cooling off towards the 21 day EMA, and 50 day MA sitting at 1.045%, and 0.957% respectively.
Gold is looking awfully toppy ($1,864.59) on the monthy timeframe, and considering the fact that crypto is clearly the new favorite hedge on Main Street, it's no wonder why we're seeing pressure in more traditional hedges like the metals. Bitcoin is up about 6% on the day, and is back at a 34k handle. Ethereum hit a new ATH today at $1,475, but is cooling off a bit as we approach the open. The Put/Call ratio continues to look like a cruel joke. We've been at historically low levels for 8 months straight, and we're sitting around 50 as of this morning. That's not a skew in sentiment, that's manipulation, and imo it's not going to end well for greedy investors piling into risk at all-time high's.
Finally, SPY is set to open near all-time high's, and is currently floating in orbit, above all technicals essentially. The upper band of the white channel is still in play, followed by a suite of MA supports between 380 and the top of the megaphone around 361. The key level I'm watching today is the 21 day EMA (376.43), for an indication of a change in the daily trend. The bears would need to recapture this level with conviction, and hold the line into the close. Having said that, we're living in La La Land right now, where price action leads sentiment, and Jerome Powell's favorite game is Ctrl + P. Expect the unexpected.
Thanks for your time today guys, and I hope you enjoyed the analysis. If you'd like to follow our live play-by-play of markets, come visit us over at the Hedge of the World website. You can find the link in our profile. Cheers, Michael.
*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
The positive sentiment that we're seeing in the Nasdaq, which is currently trading up around 1% pre-market, hasn't yet spilled over into the S&P, Dow, or Russell, as they continue to trade flat. Asian markets were mixed, and European markets traded notably in the red, with the DAX, CAC40, and FTSE 100, trading down around 1.5%. Many european nations remain under strict lockdown, which is putting continued pressure on sentiment, and of course equity valuations.
Vix caught a notable bid overnight, and is up around 7% to start the week. We're sitting at a 23 handle, and the ascending support trendline we've observed since December is maintaining it's integrity, for now. The dollar is trading off it's recent high's but is still showing strength just below the longterm descending resistance trendline - the DXY is sitting at 90.30 to start the week. The 10Y yield is breking out of it's flag formation, and to the downside. After hitting it's highest level since March 2020 a couple weeks ago, we're slowly cooling off towards the 21 day EMA, and 50 day MA sitting at 1.045%, and 0.957% respectively.
Gold is looking awfully toppy ($1,864.59) on the monthy timeframe, and considering the fact that crypto is clearly the new favorite hedge on Main Street, it's no wonder why we're seeing pressure in more traditional hedges like the metals. Bitcoin is up about 6% on the day, and is back at a 34k handle. Ethereum hit a new ATH today at $1,475, but is cooling off a bit as we approach the open. The Put/Call ratio continues to look like a cruel joke. We've been at historically low levels for 8 months straight, and we're sitting around 50 as of this morning. That's not a skew in sentiment, that's manipulation, and imo it's not going to end well for greedy investors piling into risk at all-time high's.
Finally, SPY is set to open near all-time high's, and is currently floating in orbit, above all technicals essentially. The upper band of the white channel is still in play, followed by a suite of MA supports between 380 and the top of the megaphone around 361. The key level I'm watching today is the 21 day EMA (376.43), for an indication of a change in the daily trend. The bears would need to recapture this level with conviction, and hold the line into the close. Having said that, we're living in La La Land right now, where price action leads sentiment, and Jerome Powell's favorite game is Ctrl + P. Expect the unexpected.
Thanks for your time today guys, and I hope you enjoyed the analysis. If you'd like to follow our live play-by-play of markets, come visit us over at the Hedge of the World website. You can find the link in our profile. Cheers, Michael.
*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
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