The Bear Den by Shortside Jonny
Monday, March 22, 2021 – DIA 327.24 +.38%, QQQ 318.61 +1.75%, SPY 392.59 +.80%
No high-impact data. Markets traded with a focus on interest rates. The 10-Year index (TNX) 16.84 -.48 (down 5 basis points). The NASDAQ, especially Technology (XLK) 131.67 + 2.15% and Real Estate (XLRE) 38.68 +1.10%, bolted higher as interest rates declined. Financials (XLF) 33.63 -1.29% were the laggard on the day. Rail Company Kansas City Southern (KSU) 249.09 +11.12% and Canadian Pacific (CP) 356.63 -5.8% announced a merger that will create a transportation footprint spanning Canada to Mexico. As a result of the news that restrictive lockdowns are being initiated once more in Europe, travel and leisure stocks were Hit hard; Carnival (CCL) 27.48 -5.11%, American Airlines (AAL) 23.83 -4.57%, United Airlines (UAL) 58.33 -4.02%, Expedia (EXPE) 173.09 -3.83%
Tuesday, March 23, 2021 – DIA 324.06 -.97%, QQQ 317.21 -.44%, SPY 389.50 -.79%
No high-impact data. Although Fed Chair Powell and Treasury Secretary Yellen were on the calendar for the day, traders appeared instead to be reacting to COVID-19 news flow from the World Health Organization and Europe concerning vaccine availability. Oil, as measured by WTI 57.25 -6.59%, traded off hard. Energy stocks (XLE) 47.26 -2.64% fared a bit better in comparison but still a down day. Many other stocks that had recently rallied hard and were counting on a rebound & reopening were hit hard as well; United (UAL) 53.85 -7.68%, Carnival (CCL) 25.33 -7.82%. The Hartford Insurance Group (HIG) 67.29 -.01% officially rejected last week's unsolicited buyout offer from Chubb (CB) 157.38 +.21%.
Wednesday, March 24, 2021 – DIA 324.08 +.01, QQQ 311.87 -1.69%, SPY 387.52 -.51%
Durable Goods were a considerable disappointment coming in negative -1.1% vs an expected positive .8%. Ex- Aircraft was -.8% vs. a positive .5% expectation. Equity markets were mixed and almost a polar opposite in some cases to the day before. Energy (XLE) 49.03 +2.51% bounced from the prior days drubbing. Semiconductor and semi-equipment manufacturers also bounced back, Applied Materials (AMAT) 121.10 +4.06%, ASML Holding (ASML) 578.58 +3.53%, and Lam Research (LRCX) 552.45 +1.48% prevented the Nasdaq 100 (NDX) from an even worse performance. Viacom took it on the chin (VIAC) 70.10 -23.18%, the media company announced a $3 billion offering of equity stock and convertible preferred shares after the close on Monday, March 22, but the stock took a day to digest the dilution and today accelerated to the downside. A back and forth rotation between growth and value/recovery stocks was most evident in the swings throughout the day. Reddit WallStreetBets short squeeze favorite GameStop (GME) 120.34 -33.79% released earnings that disappointed. By the end of the day, the NASDAQ succumbed to selling as traders parsed the words of Fed head Powell and Treasury Secretary Yellen's last day of testimony along with more news of delays in worldwide vaccine distribution.
Thursday, March 25, 2021 – DIA 326.19 +.65%, QQQ 311.33 -.17%, SPY 389.70 +.56%
GDP (Q4) came in at 4.3% growth. Initial Jobless claims came in much improved and the lowest level of the pandemic, but still elevated at 684K v. an expected 730K. Continuing claims came in better as well while still elevated 3.87M v. 4.043M. Markets opened lower while awaiting President Biden’s first news conference but regained their footing throughout the session. Rotation again was evident as technology (growth) underperformed value/reopening stocks. Financials (XLF) 33.84 +1.68% was the best sector on the day while Communications (XLC) 73.09 -.49% fared the worst. Travel & Entertainment stocks did well; Expedia (EXPE) 174.66 +5.13%. Retail stocks also showed strength; Ross Stores (ROST) 118.99 +3.04%. On the downside, Chinese shares continued to slide under higher interest rates and regulatory pressure from the SEC that would permit the review by regulators of financial statements of foreign companies whose shares trade on US exchanges or face delisting, Baidu (BIDU) 204.57 -14.47%.
Friday, March 26, 2021 – DIA 330.61 +1.36%, QQQ 316.00 +1.50%, SPY 395.98 +1.61%
Personal income data showed a dismal -7.1% decline but slightly better than the -7.3% expectation. The only bright spot in data released today was the Michigan Consumer Sentiment survey which posted a stronger 84.9 v. the 83.6 (which was attributed to the disbursement of relief checks.) Overall, the market rebounded & was led by Technology (XLK) 132.67 +2.54%, while Communications (XLC) 72.29 -1.09% was the laggard. Semiconductor companies led the Dow and the Nasdaq 100; Intel (INTC) 64.87 +4.6% and Applied Materials (AMAT) 128.64 +7.45%. Viacom (VIAC) 48.23 -27.31% once again came under intense pressure after a day of consolidation. Another Media stock, Discovery Communications (DISCA) 41.90 -27.45% suffered a similar drubbing. Bloomberg News reported that Goldman Sachs was busy Friday with large-scale block trades (privately negotiated trades) of shares of Chinese companies and large-cap communications conglomerates leading to speculation that a large fund or family office might be in trouble.
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