View from 5th Avenue

The View at Two – 16th March, 2021

Great Expectations?…Tweet of the day goes to whoever pointed out “A year ago today, you could've bought Tesla at $89/share. Instead, you bought 264 rolls of toilet paper and 50 bottles of bleach." Ughhh. That aside, nearly everything has been working in the stock market over the last week with the S&P trading at ATHs. But the S&P, close to extreme overbought territory (as shown in the chart below), isn’t feeling all that fresh today. Markets were well bid from the off, trading decent overnight, the stimulus cheques in the mail and the world’s biggest asset manager saying the size and speed of the rebound is not yet being appreciated. However, markets have been soggy all morning as Tech came off its highs and oil declined. Not many catalysts of note, but plenty going on in in the Autos space with Volkswagen (+7%) back above Dieselgate levels as they unveiled plans to dominate the EV market over Tesla (-2.5%). Volkswagen Ords have seen a 35% move in the last ten trading days vs a +17% move in the more liquid Prefs over the same period. Lots of speculation and second guessing as to what is going on there but not many firm answers. Energy (XLE) is finally taking a bit of a breather -2.6% and the Financial sector has also taken a back seat for the time being. One other thing being watched is how the semis act around the 50-day moving average as a leading indicator for the broader market. Note, the Philadelphia SOX index managed to re-take its 50-DMA yesterday and so far it's holding above this level today. Today's Retail Sales report for the month of February missed estimates by a wide margin, so all will be watching tomorrow's economic data on Homebuilder Sentiment, Building Permits, and Housing Starts for telling trends. Obviously, tomorrow’s Fed meeting won’t be a “live one” from an interest rate or QE policy perspective, but expectations are all the current rage.

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