Daily Summary – March 31, 2021 - Into April We Go

  Daily Summary – March 31, 2021 - Into April We Go




I ended yesterday's summary insinuating we'd see downside today due to what I thought would be some lingering quarter-end rebalancing, and while we did seem to get some of the latter (rebalance) it wasn't out of equities and into bonds as I thought might happen after one of the worst quarters for bonds ever,  but rather between equity sectors as some of the first quarter's laggards (tech, discr, utes, comms, and health care) finished green while the stronger sectors (basically the rest) finished red led to the downside by the two biggest winners, energy and financials.  We also saw it within sectors as for example high flying GME and AMC (up 908 and 283% respectively) finished red, while AAPL and AMZN which both finished down for the quarter finished green.

The same was true of indices with NDX and Naz (which finished the quarter with very moderate gains) finishing the day up around 1.5% (which was over half of the overall gains for the quarter) while the stronger RUT and SPX (both up over 5% for the quarter) lagged a bit (particularly SPX which was up 0.36%; RUT stronger up 1.13%).  And we saw it even more clearly in the style box as the stronger (for the quarter) left side finished all red while the weaker right side was solidly green.

Major Market Technicals

Technically SPX sets another ATH (just wish that RSI would break out), and we did see all three of RUT, NDX, and Naz pop over that downtrend line that's capped them since 3/15, with all three pushing up to key MA's that did cap them (50-DMA for NDX and Naz, 20-DMA for RUT). As it's month end, did a quick check of the monthly charts and all look in very good shape although all are overbought (with RSI's above 70) and substantially above their 20-month MA's.  

SPX Sector Flag

SPX sector flag improved today but still pretty mixed as noted above.  Only one sector over 1% again today (tech) although none down more than 0.92% (energy). 



SPX Sector Technicals

On sector charts, discr was able to get back above its 50-DMA and get a go long daily MACD, not a lot new. Industrials hit an ATH and got a go long crossover on daily MACD but has an RSI divergence.

Subsectors

In major subsectors, 1Q laggards biotechs and semi's were the big winners with XBI up over 4% and SOX up over 2% while 1Q leaders transp and homebuilders were mildly red.  1Q leader retail bucked the rebalance trend finishing mildly green.  

Breadth

Breadth mixed with Naz ok but NYSE really poor.  Specifically, Naz had 65% of volume positive and 62% of issues which is ok but not great for a day it was up 1.5%. NYSE had only 46% up volume and 53% of issues which is bad for a day both SPX and RUT were green (and the latter up over 1%).  So breadth remains an issue for now.  Will be interested to see if this improves as we move into April.
  
Commodities/Currencies/Bonds

Outside of equities, as noted above, we did not get any sort of rebalance flows into bonds as the entire curve lifted a bit with both the 2-yr and 10-yr yields edging up two basis points.  Without the yield support the dollar finished mildly red which in turn supported gold and copper with the former up over 1% although that just brings it back to the underside of its 20-DMA. Nat gas, VIX and crude were all red with VIX back below 20 and WTI back below 60.  There's a lot going on with crude between rebalancing, increasing global lockdowns, refinery maintenance, and the OPEC+ meeting going on right now (on the last, tomorrow's the big day with the policy meeting, where there are high expectations for a rollover of existing cuts at least another month), so I continue to think we trade in this area for a bit more time (although the chart is slowly starting to form a better base for a potential move higher as we move towards May. 

Overnight we'll get quite a bit of misc data out of Asia and Europe including final March PMI reads (mfg) followed by Challenger job cuts, jobless claims, and final PMI's in the US. KMX is the largest US co reporting. Also as a reminder it's the last trading day of the week for US equities (at least on major exchanges).  And it's also April 1st so keep that in mind.  


Which brings me to seasonality.  April has traditionally been one of the best months of the year over 10, 20, and 70 year periods, particularly the first 18 days.  So hopefully that will lift things a bit particularly with the flow of new monthly money and the removal of any rebalance overhang. 



I still don't particularly like the technical setup, but a couple of days of solid buying volume will change my tune in a hurry.  Here's hoping.  

Misc

Couple of items from today.  One is Chicago PMI came in very strong which is great.


Also soybean and corn futures were limit up today on USDA report of lower plantings than expected.  




And vaccinations continue apace with 240M doses now having been delivered and 100M+ really "delivered" (not sure how there can be such a wide disparity in doses given), but hospitalizations are picking up which is not so great.






Particularly when you don't have the vaccination part.



But brighter days are ahead.  It's just the getting there that looks to be a little more rocky.


To see more content, including summaries of some of today's economic reports go to 

https://sethiassociates.blogspot.com







































































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