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Posted March 19, 2021

Scott Stewart

By Scott Stewart

📛 [ALERT INSIDE] Taking a Bite out of Bond Market

Welcome back to the Rude Awakening for Friday, March 19, 2021.

Yesterday gave us a massive selloff and a very interesting trading day. We had a massive dump of stock and it will be telling to see what effect that has on today, closing out this trading week.

If you watch todays video, youll see almost all of our technical indicators have crossed over into sell signals.

The S&P is still above the 50day MA, which is still trending higher which also means a bullish trend. But, we are getting some negative bias from yesterdays action.

Worriers Are Going to Worry

The morning brief from Yahoo Finance claims: The 'three pillars' of this bull market are still in place. the writer goes on to say

'Worriers are going to worry,' Bank of America says

Stocks hit record highs on Wednesday after the Fed's latest policy statement.

Stocks got crushed on Thursday as investors thought more about the Fed's latest policy statement.

In this kind of environment, it's hard to know what to believe.

But strategists at Bank of America led by Ajay Singh Kapur argue in a note published earlier this week that three factors are supporting the market now that should trump any worry du jour that spooks investors: liquidity, earnings growth, and breadth. Said another way, money is available, corporate fundamentals are improving, and more companies are doing better.

"We are in a bull market for equities, a view we have reiterated since March 2020," the firm writes.

"Yet, it seems easier to find skeptics, pessimists and worriers. There is always some reason or the other since the start of this bull market to complain/worry about. That's why bull markets climb a wall of worry. Bear markets crush confidence and trigger primordial survival modes in humans... The latest worry is rising bond yields and inflation. Interestingly, we have gone from all that skepticism about no V-shaped recovery straight to the opposite end inflation! All within a few months. Worriers are going to worry." (Emphasis ours.)

Kapur and team include this great chart which shows the rise of global stocks over the last year alongside the concerning headlines that at each turn appeared to threaten the rally which began one year ago.

IMG 1

Where the Action Is

So, while the overall trend is definitive we are still very much in a bull market yesterdays action might be a tipping point. After more than a 1% selloff, we finished at the days lows.

If you look at the heat map featured in todays video, youll see that it was once again the tech stocks that caused the sea of red.

The tech sector is where a lot of the action is right now.

But, another interesting spot for traders currently is the bond market.

And thats where well find todays trade idea.

Have a great trading day, folks.

Well see you back here Monday morning!

Regards,

Scott Stewart

Scott Stewart

Editor, Rude Awakening

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