The View from 5th Avenue

The View at Two – 21 April 2021

Alka Seltzer to the Rescue….Though the major averages quickly moved from red to green this morning, two days of losses earlier this week seemed to have left a mark as the move packed a punch for the "stonks only go up crowd" (BUZZ -2.2% yesterday). That was expected to continue today after NFLX's (-6.5%) big miss last night and what it meant for the stay-at-home play. Indeed the reopening and reflation trade sectors are outperforming. That said, BUZZ is back +1.4% and markets are back to doing what they do best – going up once again as if nothing ever happened. Healthcare, Materials and Transport are leading the way for the S&P, while The Dow is being helped by Visa (+1.7%) and Home Depot (+1.1%) specifically. The Nasdaq has Microsoft (+0.5%) to assist, though NYFANG+ is -0.5% thanks to the aforementioned Netflix soil. And while small and microcaps underperformed yesterday, they are outperforming again today (RTY +1.2% and RMICRO +2% vs. MS Size -1.1%), which only goes to prove that this market wants badly to keep going up (though if Vix is any indication at 17.36, no one wants to do much of anything currently). Though there are some concerns with tax-related selling in front of next month’s IRS filing deadline, earnings will remain the name of the game. The risk is, when you are priced to perfection (and equity valuations are close to record highs), you better deliver on earnings and guidance.

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