Stock Market Today: February 8th - 12th, 2021

50 Days Below the 50-Day
Mon, Feb 8, 2021

While the yield on the 30-year Treasury bond briefly rose above 2% overnight for the first time in a year, in general, long-dated government yields are lower today. As such, the iShares 20+ Year Treasury Bond ETF (TLT) is bouncing from extreme oversold territory today rising over 0.6%. Even after today's rally, though, TLT continues to trade well below its 50-DMA as it has for 51 consecutive trading days.



The current streak of consecutive closes below the 50-DMA for TLT has now joined a list of 13 prior streaks of at least 50 trading days long. The two longest of these went on for 93 consecutive trading days ending in February of 2011 and September of 2013. While the current streak has plenty of time to go to even tie those records, the last streak was very recent ending on November 19th of last year at 63 trading days long. In fact, between the end of that streak and the start of the current streak, there were only two days. In other words, since August 24th, there have only been two days in which TLT did not close below its 50-DMA. Not only that but with TLT currently trading more than 4% below its 50-DMA, the streak isn't likely to end any time soon.



In the table below, we show each of the past TLT streaks when they first reached 50 trading days long. For each streak, we also show how TLT and SPY performed going forward. On average TLT has continued to drift lower over the following month, but three months to one year out, performance is generally much more positive. Returns have been positive better than two-thirds of the time three and six months out with average gains of 1.81% and 5.75%, respectively. One year later, TLT has traded higher all but once (in November of 2005 when it only fell 8 bps). As for equities, the S&P 500 (SPY) is similarly weak one week after these streaks averaging a decline of 0.46% with positive performance less than a quarter of the time. Again, returns further out are generally more positive with SPY higher 83% of the time 6 months later and 75% one year later.

 

Haha, and sure enough we rip it to the HOD at the close. I really need to get on adding that rocket emoji in here that @stock1234 was talking about the other week!

I literally run out of superlatives to describe this market sometimes.

Just when you think that last pullback actually had some kind of meaningful staying power, the market quickly reverses course almost immediately right back up to new ATHs. Rinse and repeat.

 

Just some quick stats lighting up my Twitter feed after today's close that I thought was worth a quick share here:

• The S&P 500 is officially up the first 6 days of February. Tying the longest streak to start any February ever (1962 also had 6). Green tomorrow would break another record.
• The S&P 500 up the first 6 days of February is the longest win streak to start any month since 6 in August 2020 and 6 in April 2019. No month has started with a 7 day win streak since September 2013. Could happen tomorrow...
• Guess the NFC winning the Super Bowl really is bullish. S&P 500 up (stocks), Barclays Agg up (bonds), gold up, crude up, silver up, VIX up, emerging markets up, aluminum/copper/nickel/zinc all up. Looks like the 10-year is about the only thing down today.

Wow! I almost feel like keying up that Cramer youtube vid

 

I wonder if we'll finally see the VIX come in and if we'll finally get that sub 20 closing print. It is kind of interesting to me how that while the market has been ripping new ATHs, how that is still stubbornly above 20 for such a long time (almost 1 full year now!)

 

Oh wow, this had also caught my attention late today. But, I just noticed that black gold was nearing the $60 handle

Looks like that is basically getting back close to pre-pandemic highs

Still has a little way's to go to get to the post-Iran conflict high from the beginning of last year though.

 

Good Tuesday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great trading day ahead on this Tuesday.

 

Morning Lineup - 2/9/21 - Blink and You May Miss it
Tue, Feb 9, 2021

After six straight days of gains, US equity futures are poised to open lower this morning. If the S&P 500 finishes the day lower, it will be the first down day since 1/29 when the S&P 500 closed below its 50-day moving average. The data calendar is on the light side this morning. NFIB Small Business sentiment was released earlier this morning and came in lower than expected (95.0 vs 97.0) falling to its lowest level since May. Later on, we'll get the release of the JOLTS report for December.

One of the hallmarks of a bull market is that corrections are swift and shallow, and windows of opportunity for investors on the sidelines is usually narrow. The pullback we saw in late January provides an excellent example. On January 20th, the S&P 500 closed at 'extreme' overbought levels which we classify as more than two standard deviations above its 50-day moving average (DMA). Seven trading days later on 1/29, the S&P 500 was down 3.7% from its high and below its 50-DMA for the first time since early November. Faster than the S&P 500 sold off from 'extreme' overbought levels to below its 50-DMA, though, it rebounded back to 'extreme' overbought levels again. Yes, just six trading days after closing below its 50-DMA for the first time since November, yesterday the S&P 500 finished the session back above its 50-DMA by more than two standard deviations.

 

Winning Streaks Coming to an End
Tue, Feb 9, 2021

While equities have been drifting higher since the open, at the moment each of the major US indices are down on the day except for the Nasdaq. For the S&P 500, Dow, and Russell 2000, a lower close today would end a six-day winning streak for each of these indices (the Nasdaq on the other hand which again is up today, is on pace to extend its winning streak to four days long). The last time that the S&P 500, Dow, and Russell 2000 all simultaneously ended winning streaks of 5 days or more was nearly three years ago in February of 2018. Just like now, each of the indices were going on six days of consecutive gains back then. June 2014 and April 2010 also saw identical six-day winning streaks for these three indices.

In the table below, we show the past 24 times since the start of 1979 when the Russell 2000 first began that simultaneously the S&P 500, Dow, and Russell 2000 saw winning streaks of at least five days long come to an end. As shown, the end of these streaks have generally led to weak performance over the next week and month for each of these indices. One week later, the S&P 500 has only been higher a quarter of the time with an average loss of just under 1%. The Dow and Russell have been a bit more consistently positive but nonetheless, move lower more often than not. As for one month out, each index averages a decline again with the Dow experiencing a move higher the least often (only a third of the time). Fortunately, three, six, and twelve months later, these indices consistently move higher albeit returns do generally underperform the norm by one year out. While returns are less than average one year out, for the Russell 2000 there has been outperformance on average three and six months later. In fact, six months after these past streaks have come to an end, the Russell has been higher over 90% of the time with 2.81 percentage points of outperformance versus the average for all periods since 1979.

 

Time For An Upgrade | Daily Market Update
Tuesday, February 9, 2021

Top Story

LPL Research Says It’s Time for an Upgrade

In this week’s Market Signals podcast and video, Ryan Detrick and Jeff Buchbinder analyze the continued resiliency of the US economy and provide strong reasons for increasing their forecast for growth and corporate profits after stocks bounced back big time last week.

Daily Insights

US stocks take a breather after advancing for the first six days of the month

• European markets are mixed in midday trading with the United Kingdom again outperforming, a reversal of last week’s trend.
• Asian stocks are mostly higher overnight with China outperforming ahead of Friday’s Lunar New Year holiday; Korea is the lone decliner.

Small business optimism declines

• The National Federation of Independent Business’ (NFIB) Small Business Optimism Index reached an eight-month low, driven primarily by deteriorating economic conditions and expectations of a less business-friendly policy environment.
• Expectations for better business conditions are at their lowest level since 2013.
• We continue to view small businesses as a bellwether for the economy and will continue to monitor how policy may be impacting small businesses’ ability to rebound from the pandemic.

Inflation debate rages, but inflation itself remains calm

• The 10-year breakeven inflation rate, a market-implied measure of inflation expectations, has reached its highest level since 2014 but remains relatively tame at around 2.2%.
• Core inflation, as measured by the Consumer Price Index (CPI) excluding food and energy, has averaged under 1.5% over the past four months.
• We do expect inflation to pick up, helped by stimulus efforts and a rebounding economy, but we don’t expect core inflation to push above 3%. We believe it is more likely to settle into the 2-2.5% range by the end of 2021 after rolling off pandemic-related distortions.

Earnings season continues to impresses

Fourth quarter earnings season has been outstanding, a key reason why we raised our 2021 earnings and stock market forecasts on Monday.



Technical update

• Energy stocks led a broad based rally Monday that saw the S&P 500 Index close above 3900 for the first time ever.
• More than 17% of the index components hit a new one-month high, the best reading since January 20 and now 83% of stocks in the S&P 500 are trading above their 10-day moving average, the strongest since mid-November.

COVID-19 news

• The United States reported 78,000 new COVID-19 cases on Monday, a 35% week over week decline as infection rates continue to decline (source: COVID Tracking Project).
• Hospitalizations continue to decline, with the cumulative total of those currently hospitalized on the brink of falling below 80,000 for the first time since November 2020.
• New daily COVID-19 deaths in the US are at their the lowest since early December 2020.

 

oh man, i actually really thought we could see some kind of sustained down day for the majors today, maybe not a huge one, but a red one nevertheless...and sure enough the bulls be like judge smails to spaulding in the movie caddyshack:

"you'll get nothing and like it!"

^ (change you'll in that quote to "bears")

 

pretty sideways day today though overall...it has been a while since we have seen this kind of chop. i'm actually very surprised the vix hasn't started moving lower more notably

 

the small caps index (russ2k) has been an absolute beast mode to start this month yet again.

i feel this chart here (courtesy of bespoke btw) really illustrates nicely just how strong the rutty has been to start this month of february. in fact, get this...

the rutty was furthest above its 200sma than it has ever been before after yesterday's close, and already up +10% to start the first 6 trading days of this month. which is the best since last november.

not only that but in the prior 2 months (dec & jan) between those two 10%+ gains, the rutty was up over +5% in the first six trading days of the month, and in oct it was up over +8%. so in other words, in each of the last five months, the russell has been up at least +5% MTD after just six trading days. but wait, there's more! back in jun and aug of last year, the russ2k was up +10.25% and +7.04%, respectively, after just six trading days.

in the entire history of the russell dating back to 1979, it has been up at least +5% MTD after six trading days just 35 times (which is 7% of all months) and there have never been more than two months in a row of back-to-back 5%+ starts to the month. In the last 9 months, however, there have been seven 5%+ starts to a month including a streak of five straight. included in those 7 months, 3 have also been gains in excess of +10%, and prior to jun of last year, that had never happened before.

tldr;?

holy schnikes to the small cap index is about all that can be said here lol

 

heh, so a last minute flush into the close finally gives the majors a red day...albeit let's call it pretty flat at best

but, hallelujah, i finally snapped my 0fer streak on the daily market direction calls!