Major U.S. Equity Indices Have Rallied To Important Resistance – Bears Likely Get Active

Unless a coronavirus vaccine is miraculously developed at record time, a V-shaped recovery in the economy is not probable.  Yet, stocks seem to be anticipating one.  The Fed is flooding the system with liquidity.  Stocks have rallied massively off of … Continued

Fed Increasingly Eyeing New Stimulus Tools, Stocks’ Reaction Function Key

posted in: Credit, Economy, Equities, Technicals | 0

US reliance on debt is growing.  Having already just about used up the conventional monetary tool and a massive balance sheet, the Fed is looking for new tools – a la Japan.  Stocks’ reaction function to Japanification is key. At … Continued

Small-Caps Led Large-Caps Last Week, Bulls Hope This Continues In Risk-On Sign, Should Stocks Come Under Pressure Near Term

Amid continued signs of macro deceleration, next year’s estimates for small-caps continue higher.  The Russell 2000 index, however, is not quite buying this optimism.  Last week, it led its large-cap peers, but remains under crucial resistance.  Should small-caps come under … Continued

Margin Debt Diverges With Stocks, VIX Maintains At Higher Plateau

The S&P 500 is within striking distance of a new high, even as margin debt is substantially below last May’s record high.  Concurrently, unlike in the past, VIX refuses to sustainably drop to high single digits/low double digits. Margin debt … Continued

Some Potential Green Shoots From Money Markets, Although Foreigners Send Different Message

There was a massive drop in money-market assets last week.  This is a potential green shoot should this continue, although bulls could not quite cash in on it last week.  The mother of all potential green shoots – foreigners – … Continued

Fed Would Like Animal Spirits Unleashed – Would Investors/Businesses Oblige?

posted in: Credit, Economy, Equities, Technicals | 0

The sharp decline in US stocks last October-December forced the Fed to do a 360 as relates to its campaign to tighten monetary policy.  The dovish shift apparently wants to unleash animal spirits.  Investors have obliged – thus far.  Will … Continued

Retail Sales Data Gives More Ammo To Those Fearing Recession

posted in: Credit, Economy | 0

Thursday’s retail sales data likely poured more gasoline into the recession-fear fire.  The cycle is getting long in the tooth.  Risks are rising.  The expansion has lasted for nearly a decade.  Contraction is just a matter of when not if. … Continued

Small-Caps Act Strong – On Verge of Major Breakout Or Triple Top?

There are some interesting dynamics in play in the small-cap sector – encompassing both fundamentals and technicals. Post-tax cuts of last December, earnings estimates were sharply revised higher.  The Tax Cuts and Jobs Act of 2017 was signed into law … Continued