Today May Be A Turning Point For The Stock Market
Michael Kramer | Mar 12, 2021 12:16AM ET
Stocks ripped higher again yesterday; there is absolutely no reason for this performance the last three days; nothing has changed. Rates didn’t suddenly plunge; the market went from dead for sale last week, and on Monday, to all of a sudden, investors are scrambling to buy stocks.
Maybe the inline CPI reading on Tuesday morning gave the equity market the confidence that inflation isn’t going to be a topic on the bond market’s mind. The bond market certainly doesn’t reflect that view.
Today we get PPI, which is expected to come in at +2.7% y/y, so we will have to wait and see the results are, but if that number comes in north of 2.7%, the equity market might have a swift and sudden change of mind.
There is still a big appetite to short the 10-year with the overnight Repo rate still in negative territory. So either the bond market has lost its mind and is totally off base, or the equity market is in for a big shock when the 10-year rate surges higher again.
When it comes to economic or Fed-related things, should you trust the bond and currency market or trust the equity market? I would take the bond market every day of the week over the equity market.
If the prices paid index in the ISM manufacturing report is a sign of what is to come, and the PPI runs about a month behind the ISM report, perhaps we will get a PPI number north of 3% today. I guess we will find out.
Would I want to chase the equity market higher ahead of this number with the VIX at 21.9 and nowhere to go but higher? No, I would not be chasing stocks higher.
Get The News You Want
There appears to be a bullish flag pattern formed in the 10-year that would suggest another leg higher is coming, which could send the 10-year to around 1.7%.
Meanwhile, we need to wonder if the exact opposite pattern has formed in the QQQ ETF, a bear flag, after struggling all day at the $319.50 level.
NVIDIA (NASDAQ:NVDA) rose yesterday, making it all the way back to resistance at the $520 level. It couldn’t make it all the way through. So this might be a level that we see NVIDIA reverse lower and head back to $465.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.