The stock market has high expectations for the Fed, even as the bond market is lowering its expectations. You are getting these knee jerk intraday selloffs but they don’t last for more than a day. We’ve seen these intraday V bottoms from lower lows, one last Friday, as the end of the month stock selling and bond buying poured in, and this Friday, as the short term panic from a strong jobs number and a weakening bond market and residual disappointment from Powell not giving Wall St what it wants took it down briefly to near levels where I was waiting to buy, only to see that buying chance disappear.
I don’t think this bounce in stocks is going to last as the bond market weakness should keep it the buyers wary. Perhaps its investors not wanting to be left in cash as the Biden pork package gets passed this month. If thats the case, then I expect a sell the news reaction after Biden signs the pork bill.
There are still a few potential negative catalysts as the 3/10/30 year Treasury auctions come up next week as bond demand has cratered with crude oil and commodity prices continuing to rise as the strongest major market in the world. That commodity market strength and strong jobs number will keep some pressure on Powell to not cave in to Wall St demands. Although we all know he eventually caves in, its just a matter of at what point. And it seems like Powell isn’t scared of the 10 year above 1.5% and SPX at 3800. Probably need to get to closer to 2% 10 year and a SPX that is below 3600 for it to catch Powell’s attention.
As for now, I am waiting for lower prices to buy either stocks or bonds.
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4 comments:
So ndx moved 11% and spx 6% in last 2 weeks. What did you do? I was short spy and got 1%. Now i am long.
If biden doesnt sign for another week give or take and mkt is expected to rally till then are we taking advantage of these movements?
Was trading mostly individual stocks last week, Did miss a couple of long opportunities and short opportunities. With Biden stimulus now passed, I expect some sell the news reaction next week. Bond market is still the key, so if bonds trade weak, that’s not good for stocks.
When is your next target to short?
4100?
I just realized that Joe Biden is basically at this point a mental and cognitive liability.
He is so out of it at this point that the White House isn't having any press conferences nor taking any questions anytime he makes a public appearance. He's just a puppet. Nothing like Trump.
With Trump, the US had leadership and a hated but steadfast captain at the helm who was capable of making decisions and jerry rigging the stockmarket at his whim with twitter.
With this clown, we have none of this. Although new ATH is coming but not for the NDX, the biggest move will be down.
The deep state installed him so they could implement all of their wish list. I am in the belief that the deep state wants economic collapse for a variety of reasons. Most likely because of a socialist agenda to redistribute wealth from the 1% ie tech companies to the population and install some kind of UBI. This may all sound farfetched, but I truly believe some form of the aforementioned is in the early stages to take place.
The covid vaccine is just a test to have people warm up to the idea of skin puncture so that something much more onerous can be done with ease down the line. Think verichip.
Bottomline, we ain't going to have the BTFD PPT thing on much longer with sleepy Joe. I bet he will not even be in office 1 year from now, and the markets will have no confidence.
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